Optimism Supports Oil Prices
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Optimism of monetary easing by major central banks, the equities market is continuing their bullish move. International markets are eagerly waiting for a statement from the Fed at the conclusion of their 2 day meeting which will followed by ECB on Thursday.
Oil futures have also taken the positive cues and trading near $90/bbl in early Asian session. The escalation of the civil war in Syria and shutdown of Enbridge pipeline are creating concerns of supply shortage. There is currently a worldwide over supply, so short term disruptions will not be harmful
Reports from the National Hurricane Center, state that there is 20 percent chance of a tropical storm formation in the North Atlantic which may turn into a hurricane and create production and supply disturbance. Taking consideration the above factors oil prices may gain during the day today.
However, from economic data front weaker economic releases from major nations may limit the gains. Already this morning Japan has released several lackluster reports; with the exception of an unexpected dip in unemployment most reports were disappointing.
The unemployment rate from German and the Euro-zone are likely to remain high. The US personal income and spending are expected to increase in a slower pace in the last month. Overall, we may expect oil prices to trade in a higher side ahead of US data releases.
Gas prices are trading above $3.209/ MMBTU with a marginal correction of 0.15 percent having soared close to 10% in the past week. The US Energy department reported that natural gas demand has increased by more than 1 percent in the last week, highly contributed by power sector which might be supporting gas futures to trade on higher side. Other than this, optimism from major central banks in the world to recover global economy might be adding positive point in prices. As stated above there is a 20% chance of a hurricane in the gulf which could pressuring prices.
Gains may be limited in gas prices as residential consumption in US is likely to slow down due to mild weather expectation by US weather department in today. But as the old saying goes, the weatherman is never right.
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