Oil & Gas Update

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During early Asian session, oil futures prices are hovering above $84/bbl with marginal gain of 0.30 percent in electronic platform. As per American Petroleum Institute, crude oil stocks have declined more than 0.60 million barrels. Fall in oil stocks might have added some positive points in oil prices. However, we may expect the gains may not continue to sustain on concern of slowdown in global economy growth.

 Most importantly, today market is waiting for the FOMC minutes of Fed meeting. Extension of operation twist by Fed government may not hint for any further quantitative easing which may weigh on oil prices. Most of the Asian equities are trading down on concern of slowdown in China economy growth, which may limit the gains in oil prices. From economic data front, US trade deficit is likely to widen further adding pressure on oil prices. Investors must eye on DOE inventory data releasing tonight.

As per DOE, crude oil stocks are likely to fall, whereas other petroleum stocks may climb up. Thus, mixed picture of inventory data may limit the gain oil prices.

Currently, gas futures prices are trading below $2.870/mmbtu with marginal gain of 0.40 percent in Globex electronic platform. Today we may expect gas prices to continue the bearish trend on concern of lower demand due to fall in temperature in US consuming region. On the other side, as per National Hurricane centre, there are 60 percent chances of tropical storm formation near eastern pacific region which may create supply concern to add positive direction in on gas prices. Consumption of power sector has also increased by 1.5 percent, which may support gas prices to remain on higher side. As per US weather forecast, temperature is expected to remain high in eastern region, which may create demand for gas consumption. However, called off of Norway Energy industry strike may limit the gain in this commodity.

There has not been much news of the Japanese request for NG exports to Japan, the proposal is under consideration by the EIA, but is supported by the Administration. No final decision has been made, but markets are hoping for favorable approval, opening the way for additional demand for the US’s high production of Natural Gas.

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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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