Crude Oil and Natural Gas Fundamentals

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Wednesday morning, oil futures prices are holding almost flat at $95/bbl with a reaction to the inventory data expectation. As per US energy department crude oil stocks are likely to fall by more than 5 million barrels in the last week along with other petroleum stocks. However, refiners are likely to cut their capacity utilization due to hurricane season. On the other side, largest oil consuming nation US’s vehicle sales has been increased in the last month might be supporting prices slightly.

U.S. crude-oil futures fell Tuesday amid declines in broader markets as worries re-emerged about the economic outlook following weak data on the manufacturing sector. Prices tumbled from positive to negative territory early in the session as investors fled from a poor reading on the U.S. manufacturing sector. While U.S. fuel-product supplies have dropped in recent weeks compared with average levels, signs of weakness in the global economy, particularly in China, have tempered hopes about continued oil and fuel demand. Still, traders, worried about increasing tension in the Middle East, are reluctant to bet on big declines. Rhetoric from Israel and Iran about Iran’s nuclear program has grown more contentious in recent weeks.

ECB president Mario Draghi has said about buying bonds while may go for unchanged interest rate. Thus, ahead of tomorrow’s meet global market is getting skeptical which is showing in the equity market. The shared currency is likely to remain weak ahead of tomorrow’s meet and lower economic data expectation from euro-zone.

From economic data front, PMI numbers from Europe and German are likely to remain under growth which may weigh on the shared currency and weigh on oil prices. Increasing nonfarm productivity with slower pace rise in unit labor cost may support oil prices in the US session on speculation of higher demand on the back of increasing demand from US consumer.

Crude oil prices declined, as concerns about slowing economic growth and curbed demand for petroleum countered hopes for more monetary stimulus from central banks in the United States and Europe.

Global crude oil markets are reasonably well supplied, but there are signs of tightening in refined fuel products, as per the head of the International Energy Agency.

G7 finance ministers have voiced concerns about the effect of high oil prices on the global economy but officials in Italy and Germany last week indicated opposition to releasing strategic petroleum reserves.

Natural gas prices are trading almost flat at $2.854/MMBTU in Globex electronic platform. As per US energy department, natural gas storage is likely to increase in a slower pace than prior week, may support gas to trade on higher side.

An active hurricane season with presence of tropical storm Leslie which is becoming stronger but not moving much may keep threat of supply disturbances. This may support the trend in gas prices.

Natural gas futures rose nearly 2%, yesterday up for the fourth straight session along with stronger cash gas as industrial demand returned after the long US Labor Day holiday weekend.

The use of natural gas in U.S. trucks and fleet vehicles could skyrocket over the next two decades as low prices and new infrastructure provide incentive to switch to the cheap fuel was recently cited in an article in Reuters which is helping to support prices

The number of rigs drilling for natural gas in the United States slid by 13 last week to a 13-year low of 473, as per data from Houston-based oil services firm Baker Hughes showed.

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About: FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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