Crude Oil Up Natural Gas Flat Crude oil closed at a one-week high, after an official weekly oil report from the Energy Information Administration showed US crude stockpiles have plunged more than expected last week and were also supported by a weak dollar. WTI prices had risen yesterday thanks to a sharp decline in US oil inventories, indicating stronger demand in the world’s biggest economy. The US Department of Energy said that stockpiles in the United States plunged 6.3 million barrels in the week ended May 31, much more than analysts expected, with the average estimate pegged at a 400,000 drop. Crude oil inventories declined by 6.3mn barrels, gasoline stocks were down by 0.4mn barrels and supplies of distillate fuel, which include diesel and heating oil, grew by 2.6mn barrels. Crude oil is trading at 93.86 this morning gaining an additional 12 cents. The weak US dollar is helping to support crude prices. The lower dollar makes dollar denominated commodities more attractive to foreign investors. The US dollar has eased from 84.4 last week to trade at 82.57 flat this morning, while the euro has gained to trade at 1.3097. Oil prices were mixed in Asia today, with traders treading carefully ahead of Chinese trade and industrial production data as the regional powerhouse shows signs of slowing down, analysts said. The National Bureau of Statistics in Beijing will unveil the figures for industrial production, retail sales and inflation on Saturday. Developments in China are closely watched as it is the world’s second biggest economy and largest energy consumer. The International Monetary Fund has recently cut its 2013 growth forecast for the country to 7.75 per cent from an earlier projection of 8.0 per cent. The Brent-WTI spread, the difference between the spot prices of Brent and West Texas Intermediate (WTI) crude oils, has narrowed considerably over the past several months. The spread, which was more than $23 per barrel in mid-February, fell to under $9 in April, and has ranged between $7 and $10 since then. The narrowing of the spread is supported by several factors that have depressed Brent prices or strengthened WTI prices, including the displacement of Brent-quality crude imports into North America by increased U.S. production that is flowing to refiners through expanded crude-by-rail and pipeline infrastructure. Prices for WTI should be much lower based on fundamentals and global supply as US production continues to increase. Natural gas is trading at 3.996 just below the $4 price level which is becoming the norm for natural gas as global demand slowly increases as the US prepares to allow global exporting of US natural gas. Natural gas futures traded in a narrow trading range, as investors weigh increases in US stockpiles in recent weeks against the possibility that hot weather or tropical storms in the Gulf of Mexico will send prices higher as summer approaches. Natural gas inventories to be released later today are expected to increase by 90-95bn cubic feet.
Posted on: Thu, 06 Jun 2013 08:06:10 +0000
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