Crude Oil and Natural Gas Updates

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During early Asian session, oil futures are seen hovering below $82/bbl with loss of more than 0.80 percent in electronic trading. Most of the Asian equities are trading in a negative note as euphoria over Spain bailout fades.

Question has come out that, who will pay for Spain bailout? So, we may expect the seventeen nation currency Euro to remain under pressure with the above question mark ahead of Italy bond auction on Thursday. So, weakening Euro may weigh on oil prices. From fundamental front, Saudi Arabian Oil Minister Ali al-Naimi said OPEC may need a higher output quota and the U.S. issued more exemptions from sanctions for buying Iran’s crude. The production quota is expected to increase by OPEC members above 30 billion barrels per day, which may have negative impact on oil prices.

On other side, due to fall in Iran crude oil import by some of the major Iranian oil consuming nations in last six months, US have expected them from the sanction. The list includes India, South Korea, Malaysia, Sri Lanka Turkey and Taiwan.

Most importantly, oil market is eyeing for OPEC meet on tomorrow, which may create a sluggish trend in oil prices. From economic data point, economic release in the form of fall in import prices index is expected whereas fall in monthly budget may create a negative picture of the US economy. So, oil prices may further come down during US session. Overall, we may expect oil prices are expected to trade under pressure throughout the day today.

Leading oil producer Saudi Arabia put itself on a collision course with fellow OPEC member countries on Monday by calling for an increase in the cartel’s output target despite a recent fall in crude prices.

The United States extended exemptions from its tough, new sanctions on Iran’s oil trade to seven more economies Monday, leaving China the last remaining major importer exposed  to possible penalties at the end of the month.

Output at the biggest U.S. refinery could be cut by more than half for up to five months after Motiva Enterprise’s failed to restart a major new crude unit at the Port Arthur, Texas, plant over the weekend, sources familiar with operations said on Monday. Any oil stock release would have to be motivated by a crude supply disruption, not by the price of oil, the head of the International Energy Agency (IEA) said on Monday, adding there were currently no major gaps in supply.

Workers from   Britain’s Croydon oil refinery on Monday disrupted the supply of fuel heading to some petrol stations in the southeast of the country to protest against the plant’s closure and demand the government intervene to save 900 job

Currently, gas futures prices are trading below $2.220/mmbtu with loss of more than 1.2 percent. Natural gas demand is expected to decline on account of normal weather expectation. As per US weather channel, weather is likely to remain normal which may not pull demand of gas and ultimately weigh on prices. Currently, the storage level is at 2877 BCF, positioned storage volumes 732 Bcf above year-ago levels. In the coming week, also the injection level is likely to increase on the back of rising supply and lower demand, which may weigh on gas prices. Most importantly, As per National Hurricane Center, as of now there is no tropical storm formation is seen in North Atlantic region. Normal temperature in consuming region of US, may pressurize gas demand for the day.

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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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