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Crude Oil & Natural Gas Ease On Lackluster US Data

By:
Barry Norman
Updated: Aug 21, 2015, 14:00 UTC

WTI crude oil is trading steady at $96.83 holding right under its high of $97.00, deriving strength from improving macroeconomic landscape in the world's

Crude Oil & Natural Gas Ease On Lackluster US Data

Crude Oil & Natural Gas Ease On Lackluster US Data
Crude Oil & Natural Gas Ease On Lackluster US Data
WTI crude oil is trading steady at $96.83 holding right under its high of $97.00, deriving strength from improving macroeconomic landscape in the world’s top oil consuming nation. Improving labor markets, bottoming housing sector and improving consumer confidence has overshadowed subdued Chinese and European macroeconomic numbers. In addition, escalating belligerence between North Korea and South Korea has aggravated the geopolitical tensions, which is also providing support to the energy prices. Near term support for WTI prices have been witnessed at $96/bbl. and resistance at $98/bbl.

Last week the updated report from the OECD showed strong recovery in the US and Asia praising bold monetary policies adopted by the Bank of Japan and Prime Minister Abe. The Bank of Japan is meeting this week and is expected to announce new programs and additional stimulus to meet its 2% inflation targets, which will support crude oil prices. The report also upgraded growth forecasts for the US and China helping prices to rise. The only negative in the report was the eurozone which the report says is weighing on the global recovery and downgrading growth for 2013 for the zone.

Crude prices were pressured by a slowdown in US manufacturing activity which came at 51.3 vs previous 54.2. A shutdown of a pipeline which carries 90000 bpd due to an oil spill has also lead to a supply glut at the delivery point, putting additional pressure on prices. However expectations of higher demand from Asian markets in the coming months limited the downside in crude prices. Traders can expect crude prices to go down as higher inventories expected tomorrow is likely to raise concerns of excess supply and push prices down.

U.S. commercial crude oil stockpiles were seen rising due to a high level of imports, while inventories for oil products were forecast to have fallen, a preliminary Reuters poll of analysts showed on Monday. Chevron Corp. said on Monday it has completed repairs to a fire-damaged central crude distillation unit at its 245,000 barrel-per-day (bpd) San Francisco Bay area refinery in Richmond, California.

Demand for Saudi crude is likely to rise over the next few months, Saudi oil minister Ali Al-Naimi said on Monday, in a sign that the world’s largest oil exporter sees a recovery in its biggest export market, Asia. Japan reported a drop in imports from Iran as it is becoming more and more difficult to process payments or procure insurance or shipping. Japan is now trying to import cheaper shale natural gas from the US to offset the higher costs of crude oil. Japan is waiting for an approval from the US government. Natural gas declined on NYMEX for the second straight session, on expectations that demand for heating fuels will ease with milder US weather. Winter has now passed and the near term outlook is for seasonal temperatures. Gas prices are supported by additional export demand. New York Mercantile Exchange natural gas ended down 0.9 cent at $4.015 after trading between $3.934 and $4.044.

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