Commodity Blog

Posts Tagged ‘OPEC’

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.

Oil prices were heavily hit by the economic recession in 2008, but now they are rapidly rebounding. Will this trend continue in the next years?

In fact, analysts expect the so-called Oil Peak. Global production probably isn’t ready to satisfy quickly growing demand. While developed countries are expected to keep their consumption of oil on stable level or even experience a slight decline of demand, developing countries, primarily China and India significantly accelerate the rate of their consumption, leading to noticeable jump in the global demand in coming years. China’s oil demand has increased 28% over a year by January 2010. In the same time, any noticeable increase of production isn’t expected. OPEC considers their current level of production in target range and isn’t planning to expand it. There is expected an increase of output from Non-OPEC producers, but it’s unlikely that their supply will be enough to satisfy the ever-growing demand. New sources of oil, like findings in Brazil, Columbia and Mexico looks perspective, but it may take a lot of time before the actual drilling will begin.

The growth of oil prices may be not very noticeable in the next two years as the economies worldwide are struggling to recover. Crude oil prices averaged $84 per barrel in April 2010. Oil prices will average about $84 per barrel over the second half of 2010 and rise to $87 by the end of 2011. By 2015 consumption should exceed supply by 10 million barrels per day (MBD). By 2030 the global demand will reach 118 MDB, while producers will be able to supply only 110 MBD. Barring any unexpected major occurrence, like developing and implementing some new sort of fuel instead of conventional gasoline and diesel fuel or significant easily accessible find, by 2030 crude oil price will soar above $100 per barrel level, maybe even jumping as high as $150 per barrel.

Crude oil fluctuated as the dollar fell, bolstering the demand for commodities as an alternative investment, and after a government report that the U.S. economy expanded less than predicted in the fourth quarter of 2009. The U.S. currency fell as much as 1.1 percent versus the euro. OPEC is planning to raise shipments by 1.7 percent in the month ending April 10th, signaling that demand in Asia stays high. May delivery for crude oil fell $0.14 to $80.39 per barrel as of 10:26 on NYMEX.

Hog futures slid on outlook for lower reductions of the U.S. breeding herd. U.S. hog farmers held back about 5.855 million sows for breeding by March 1st, that’s 2.3 percent down from a previous year. Reductions declined as farmers expect that profits may rebound after losses on slumping pork demand and high corn prices. June futures for hog settlement slid $0.00175 (0.2 percent) to $0.7945 per pound by 11:44 on the Chicago 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.

Crude oil price reached the highest level in six weeks because of the weakening dollar and the speculation that the global economy are recovering and energy demand rebounds.

Stocks rose after retail sales in the U.S. increased, aiding prices. U.S. retail sales increased 1.4 percent in October.

The Organization of Petroleum Exporting Countries will meet on December 22nd to discuss output targets. OPEC don’t plan to increase its output quotas. According to OPEC’s president the producer group is content with current level of oil price. As he reports, even the price as high as $80 per barrel “is not too high” and should not prevent economic recovery.

December delivery for crude oil added $2.64 (3.5 percent) to $78.99 per barrel by 13:50 on the New York Mercantile Exchange.