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This morning, oil prices have taken positive cues from this optimistic market ahead of US consumer confidence index which is likely to increase after Fed monetary easing. However, the down grade of the Asian Pacific region by credit rating agency S&P is limiting gains and weighing on regional market. On the other side, increasing crude oil production and import may add more stock piling of crude oil in US. Rising refinery capacity may increase petroleum stocks. However, concern of declining gasoline demand is likely to pressurize oil prices. Talk of releasing strategic reserve before presidential election in order to keep gasoline price lower is another factor to weigh on crude oil prices. In the US the Obama administration has said that the Iran state oil company’s is involved in nuclear program, ahead of tomorrow’s speech of Iran President on Iran Nuclear program, oil futures prices may remain volatile.
Yesterday, Nymex Crude-oil futures retreated after several reports underscored sputtering economic growth in some of the world's biggest oil consumers, raising fresh concerns about demand. Crude oil has been especially volatile in recent weeks. Traders bought crude last week on the hope that a resolution of the debt crisis in Europe will increase economic activity and demand for oil.
This weekend's argument between the leaders of France and Germany has popped that hopeful bubble. Press reports out of Asia indicate that growth in China is slowing down faster than previously thought. Widespread protests over a territorial dispute with Japan have disrupted production at many Japanese-owned factories in China while the ongoing leadership transition has suffered a few bumps along the way which have increased the overall level of uncertainty in China. This has added to negative sentiment on oil. Negotiation talk between China and Japan are scheduled for today in order to resolve the Island dispute. South Korea has declared to lower its fiscal deficit by increasing its spending 3 percent for 2013 budget.
In the eurozone, the IMF has said that Greece is not going to ease its debt crisis soon due to delay in recapitalization and weakening economy. The Spanish stress tests are due this week and the euro is likely to remain under pressure which may ultimately weigh on oil prices.
This morning natural gas prices are trading above $3.00/MMBTU with gain of more than 1 percent. The National Hurricane Center reports that, tropical storm Miriam has reached category 2 level of Hurricane near to PADD IV region accounts for more gas production in US. MDA Earth Sat, another leading weather forecaster, said the 6 to 10-day forecast period would see cooler temperatures. Speculation of rising demand for space heating purpose may support gas prices to trade on higher side along with hurricane warnings.