Crude Oil Prices Ride A Rollercoaster

Crude oil speculators seem unable to figure out where prices are going. The official EIA inventory on Wednesday printed lower than forecast but gasoline supplies soared sending traders for cover. In Asia on Thursday prices added 32 cent to 42.27. Oil dropped to a low of 39.91 a barrel after the data report. That’s the cheapest price since the final week of August when market mayhem rocked Wall Street amid fears about China’s economic slowdown. Oil settled at $40.75, but it’s still down 13% this month.  Speculators had been hoping that the worst was over for oil. Price rose for much of September and October as concerns about a global recession faded. Oil even briefly topped $50 a barrel in early October after Russia launched military operations in Syria, raising the specter of supply disruptions. Brent oil climbed 29 cents to 44.51

U.S. crude inventories grew by 252,000 barrels last week, according to data from the Energy Information Administration. The smaller than-expected stockpiles growth convinced some traders and investors to cover short positions in late trading, helping oil prices recover.

Crude tumbled after the EIA data showed the eighth straight week in builds leaving inventories at 487.3 million barrels, within a hair of the April record of 490.9 million. Gasoline stocks rose 1.0 million barrels. Distillate stockpiles, which include diesel and heating oil, fell 791,000 barrels.

The U.S. dollar continues to strengthen as investors bet the Federal Reserve is finally ready to raise interest rates. So far this month the dollar has soared 3% against a basket of currencies. It’s also nearing parity with the euro. All of that is bad news for oil because a stronger dollar makes commodities like crude that are priced in dollars more expensive to overseas buyers, so they tend to buy even less.

Iraq’s semi-autonomous region of Kurdistan has begun targeting Baltic crude markets in northwestern Europe, rivaling traditional Russian supplies and increasing an oil glut in the region, trading sources said and shipping data showed.

 Oil analysis agency Platts said on Wednesday it will add Qatar’s alShaheen and Abu Dhabi’s Murban crude to its Dubai and Oman benchmarks from January 2016 to boost the liquidity of its price assessment process.

With oil, copper and coal trading around their lowest levels since the global financial crisis, some investors are betting that the bottom may be close for these critical commodities and have increased their long positions in the market. For industrial commodities like copper, China was the savior of markets following the 2008-09 crisis after Beijing unleashed massive economic stimulus program to boost demand.

Back then, confidence in China’s capacity to underpin demand for commodities supported a contango forward curve with copper futures contracts for later months above the spot price.