Commodity Blog

Posts Tagged ‘crude oil inventories’

Despite falling down for the first two days of the week, the crude oil is managing to show a positive weekly advancement as of today, while the current daily gain isn’t something exceptional. As with the Forex pair of EUR/USD, GDP data helps.

Oil is a perfect bet when the market believes in the economic growth or recovery. Today we’ve got another proof of that, as the oil rose despite having a moderate weakness; the riskier traders bought it before the GDP release in the United States (1.6 percent growth in Q2 2010). During the first two days of the week, oil lost about 2.8 percent of its value but, starting from Wednesday, it’s showing a moderately strong rally.

This year, the level of $70/barrel looks to be a major bottom limit for this commodity — it was proven for the 4th time this week. Analysts hope that in the near future we’ll hear some positive growth-assuring rhetoric from the world’s officials and that it will be able to support the oil prices further. At the same time, further increases on the oil inventories (and this week we’ve witnessed a report for more than 4.1 million barrel gain in US) can put the prices at risk.

Crude oil (Brent) is now trading near $75.29 per barrel as of 13:21 GMT, going up from $74.85 open price. It traded at as low as $71.75 on Wednesday.

Crude oil fell to its new minimum level since July 7 today as the traders reacted to the speculations about the stalling global economic recovery and sold the commodity after the US housing report showed a decline in the existing home sales to the lowest level in the index history.

The oil is quite sensitive to the pace of the global growth, and if new signals of the feared second wave of the recession loom on the horizon, speculators tend to sell their crude contracts as soon as possible. Being one of the most speculatively traded commodity is a nice advantage during the growing market but it’s a bane during the time when the annual rate of the home sales falls by more than 25 percent in one month in United States.

Today is the fifth straight bearish day for the oil. Since the end of the recent rally (August 4), the commodity had only two bullish daily trading sessions. The analysts forecast a growth of the crude oil inventories for the last week (the report will be released tomorrow). Under the increased supply’s pressure, the prices will probably continue going down.

Spot oil (Brent) is current trading at $72.75 per barrel as of 15:22 GMT. It closed at $73.65 yesterday and touched as low as $72.20 earlier today.

Crude oil fell today as reports showed that US oil and motor gasoline inventories declined less then expected, while US stockpiles of petroleum and distillate fuel increased. US crude oil inventories decreased by 0.8 million barrels from the previous week to 354.2 million barrels, while a decrease by 1.1 million was expected. Gasoline inventories fell 39,000 barrels to 223.3 million, compared to a predicted drop by 375,000. Stockpiles of distillate fuel went up 1.07 million barrels to 174.2 million and petroleum inventories increased by 5.3 million barrels last week.

Analysts say that demand remained strong and even grows, it’s just that growth of supplies outpaced demand. Total US fuel consumption grew 0.4 percent to 19.6 million barrels per day in the last month, while gasoline demand rose 6,000 barrels per day at the same time to 9.45 million, the highest level since August 2008. Reports showed a mixed picture, where balance of supply and demand may easily shift, so oil prices may move in any direction in the future. Prices advance can be limited, though, by concerns for the global economic recovery.

September delivery for crude oil slipped $0.35 (0.5 percent) to $75.42 per barrel on NYMEX. Futures reached $73.83, the lowest price since July 7. Oil prices are still 9 percent higher than at the same period in the previous year.

Crude oil gained today after weaker dollar and improving confidence in economic growth increased appeal of the commodity. Initial unemployment claims in the U.S. decreased to 457,000 in the week ending July 24 from the previous week’s revised figure of 468,000. Unemployment in Germany also decreased, falling by 20,000.

The weaker dollar spurred commodity prices. Extensive buying of energy commodities by investment funds also bolstered oil prices.

Positive news from financial markets drew attention away from potentially negative factors. Among such factors are increasing inventories and imports of crude oil in the U.S. Increasing supplies also may show negative influence in the future. OPEC output grew by 80,000 barrels (0.3 percent) to an average 29.24 million barrels per day.

September delivery for crude oil rose by $1.37 to $78.36 per barrel on NYMEX. Prices were up 3.6 percent this month.

Wheat gained on speculation that futures will advance, causing investors, who had bet on price decline, to buy back contracts and to close out positions. Speculative long positions in wheat futures were outnumbered by short positions by as much as 51,195 contracts in the week ended February 16th in Chicago. May futures for wheat delivery added $0.1025 (2 percent) to $5.14 per bushel by 10:16 on the Chicago Board of Trade.

Crude oil gained on signals that fuel demand may rise in the U.S. as economy recovers. Price was also aided by the dollar’s decline against the euro. The number of tankers used as floating storage for crude oil and diesel dropped 20 percent in January. April delivery for crude oil went up $1.70 (2.2 percent) to $79.87 per barrel as of 10:41 on NYMEX.

Wheat futures slid on speculation that the stronger dollar and growing global stockpiles will cut demand for the U.S. grain. U.S. government forecast that world wheat inventories will rise 19 percent to 195.9 million metric tons in the year ending May 31st, the record level since 2002. May futures for wheat delivery slid $0.075 (1.4 percent) to $5.12 per bushel by 10:25 on the Chicago Board of Trade.

Crude oil fluctuated as the dollar rebounded versus the euro, equities rose more than predicted and on speculation about the global economic recovery. U.S. Energy Department reported that U.S. supplies of crude oil rose 1.73 million barrels last week. March delivery for crude oil dropped $0.18 to $76.83 per barrel as of 10:53 on NYMEX.

Cattle futures tumbled from a 15-month record as U.S. wholesale prices for the meat reached a highest in four-weeks, signaling that retailers may slow purchases of beef. Wholesale choice beef rose 0.6 percent to $1.4486 per pound, the highest price since January 20th, as cold weather in the U.S. reduced cattle-weight gains and diminished beef supplies. April delivery for cattle futures subtracted $0.002 to $0.91975 per pound at 11:23 on CME.

Oil gained after forecast about winter storms in the U.S. this week. The National Weather Service is predicting that temperatures will be below average for the next 6–10 days. According to weather forecast Washington temperatures will be 10 degrees Fahrenheit (12 degrees Celsius) below normal as of February 14th, while New York will be 8 degrees below average by February 13th.

U.S. inventories of distillate fuel, including heating oil and diesel, decreased last week after temperatures fell. OPEC governor stated today that global oil supplies are enough to satisfy demand for the first half of 2010.

March delivery for crude oil advanced $0.73 cents (1 percent) to $71.92 per barrel by 11:58 on the New York Mercantile Exchange. March delivery for heating oil rose $0.016 (0.9 percent) to $1.8908 per gallon. March settlement for Brent crude gained $0.61 (0.9 percent) to $70.20 per barrel on ICE. Hedge-funds and other large speculators reduced bets on increasing oil prices for a third week.

Sugar futures rose in New York, continuing a rally to the record price in 29 years, on concern that supplies will shrink as worldwide demand exceeds production. Sugar price more than doubled in the previous year as drought in India and excess rainfalls in Brazil have cut cane yield. Analysts say that “a deficit in the sugar market will help the commodity to outperform a lot of the softs”. March futures for raw-sugar delivery gained $0.004 (1.4 percent) to $0.2802 per pound as of 9:52 a.m. on ICE

Crude oil fluctuated after forecasts that temperature in the northern U.S. will rise next week. About four-fifths of the U.S. heating oil consuming depends on the weather in the northeastern U.S. U.S. stockpiles of distillate fuel, including diesel and heating oil, slid 1.78 million barrels last week. February delivery for crude oil dropped $0.04 to $81.47 per barrel by 10:49 on the New York Mercantile Exchange.

Crude oil gained in New York, touching a record level in 10 years, as cold weather in the U.S. pushed up prices for heating oil. Frosts will spread over the U.S. Midwest in the next five days, while most of the East and South will stay below normal through the middle of January.

Heating oil reached a 13-month record after forecast that temperatures through mid-January would be below normal. U.S. distillate supplies, including diesel fuel and heating oil, declined 2.06 million barrels (1.3 percent) to 159.3 million barrels last week. Refineries will need more crude oil to produce heating oil after its stockpiles have shrunk.

OPEC raised output this month to benefit from growing rising prices. The 11 members of the Organization of Petroleum Exporting Countries increased supplies by 115,000 barrels per day to 26.615 million per day.

February delivery for crude increased $0.4 (0.5 percent) to $79.68 per barrel by 11:09 on the New York Mercantile Exchange.

Crude oil is the raw material used in producing heating oil, gasoline, jet fuel, diesel and other petrochemicals. Three greatest oil producers in the world are the United States, Russia and Saudi Arabia. Crude oil prices directly affect the cost of home heating oil, gasoline, electric power generation and manufacturing. Being the major energy source, oil attracts attention of many investors. Oil price was steadily rising through 2009. Will this trend remain in 2010?

Let’s look at different factor influencing oil prices. As crude oil used in production of unleaded gas and heating oil, prices of these commodities can influence price of the oil. A very cold winter results in higher demand for heating oil, pushing prices for crude oil up. A very active driving season during summer vacations can boost the demand and, as a result, prices for crude oil. Obviously, potential world crises in oil-producing countries may also significantly boost prices of the commodity.

Generally, outlook for oil prices is rather positive. Global economy recovers and rebounding economy requires energy sources, spurring demand for oil. OPEC is expected to decrease its oil production. Production output of non-OPEC countries, while rising, will not offset growing demand for the energy source. Declining dollar forces investors to invest in commodities, like oil, as a hedge measure. Easing credit markets makes it cheaper to store crude oil. All these factors promise bright future for a crude oil.

Telling all this, we should remember that not everybody agree on such optimistic outlook. Some analysts insist that rising supplies, partially because of new technologies giving access to new drilling sites, will catch up demand and will drive oil prices down. Also declining dollar can make prices, measured in U.S. currency, somewhat misleading. Analysts point out that, while dollar prices have surged this year, prices measured in non-U.S. currencies rose not that much and actual oil prices were similarly increased not very much.

So, what price for the black gold can be expected in 2010? There are different opinions on this matter. Technically, long term support level exists at $50 per barrel. Actually, even most pessimistic predictions are not putting oil price in 2010 below $60 level. Another major support and resistance level rests at $75. Most analysts think that the commodity will be traded at this level or somewhat higher in the next year. There are forecasts that put prices as high as $90 in 2010 and even $110 in 2011. But we should remember about another resistance level at $100 which is hard to overcome both from technical and psychological points of view. Take all this factors into account when deciding your trading strategy for the oil but remember to watch market carefully as, in the end, it says what is right and what is wrong.