Energy Products Tumble Coming Close To 2013 Lows

 

Crude oil remains below the $95.00 price level recovering 18 cents this morning to trade at $94.99 after tumbling on Wednesday after the EIA inventory release. Brent oil is trading at 105.17 gaining 24 points but remains well below the 106 level. One of several factors contributing to the sharp drop in global oil prices in recent months has been optimism about a deal over Iran’s nuclear capabilities. Despite Tehran’s denials, fears the country is developing nuclear weapons has kept the international benchmark price for crude oil above $100 a barrel for nearly three years. Lower crude oil prices have already benefited American consumers. As Brent crude oil prices have plummeted nearly 10 percent since September, retail gasoline prices on average have plunged about 25 cents a gallon. According to AAA, the national average price for regular gasoline—at $3.23 a gallon on Wednesday—is the lowest price of the year.

A new round of talks over Iran’s nuclear program begins in Geneva on Thursday. Iran’s top negotiator has said it is possible that there could be a preliminary deal as early as this week, which could have a dramatic impact on oil prices—and U.S. consumers. International sanctions aimed at curbing Iran’s nuclear program have halved the country’s oil exports, which topped 2 million barrels a day at the beginning of 2012. But more moderate leadership from Iran’s new president, Hassan Rouhani, who took office in August, has eased tensions and raised expectations that sanctions may be rolled back.

Energy Information Administration (EIA), the Energy Department’s statistical arm, on Wednesday released its report covering U.S. crude supplies of last week. Crude supplies increased by 1.6 million barrels to 385.4 million barrels for the week ending Nov. 1, fewer than market expectations for a rise of 2.5 million barrels. It was a seventh straight week of rising crude stockpiles.

Investors are closely watching two important U.S. data for clues as to when the Federal Reserve may start tapering its bond purchases program. The U.S. Commerce Department will release the third-quarter gross domestic production figure on Thursday, followed by October’s nonfarm payrolls report by the Labor Department on Friday.

The U.S. shale boom is causing a cascading series of changes in global energy markets that are altering the landscape for oil trading houses and opening up new ways for them to profit, a leading Swiss trader said. Natural gas is one of the commodities witnessing higher production due fracking which is seeing the US production increase at record numbers. Natural gas fell this morning by 11 pips to trade at 3.493 ahead of this week’s inventory from the EIA. Traders are expecting a sharp rise in supplies as residential demand tumbles with temperatures remaining seasonal.