Oil and Gas Trending Down

Traders remain focused on the situations in the Middle East and Eurasia but there seems to have been little real supply disruption. Fighting and killing in Gaza dominate the headlines but every once in a while eyes shift to the growing violence in Ukraine. Ukraine has been unsteady ever since pro-Russian separatists shot down an innocent Malaysian airliner crossing Ukraine airspace. Crude oil is trading at 101.57 down 53 cents this morning while Brent oil eased 33 cents to trade at 107.88.

Over the weekend photos showed that Russia has shelled across the border into Ukraine, the Obama administration said, as Dutch Prime Minister Mark Rutte said signs of heavy fighting prevented investigators from reaching the crash site of Malaysian Air Flight 17. Ukraine’s forces were attacked twice from Russian territory, the Ukrainian defense ministry said in a posting on Facebook, without giving further details.

Global markets are unsure of President Putin’s end game, after Putin seems to be taking huge risks to the Russian reputation and global branding which might hurt the Russia economy worse than expected.

Israel renewed its operations in the Gaza Strip after a brief cease-fire called by the United Nations for humanitarian reasons ended as militants in the Hamas-controlled territory launched more rockets and mortars. About 2,500 rockets have been launched from Gaza since the escalation began almost three weeks ago. Israel has carried out 3,800 air strikes, and troops have been sent in to destroy tunnels it says were used by militants to infiltrate the country. About 1,150 Palestinians, 45 Israelis and a Thai worker in Israel have been killed in the fighting

Prices slid as much as 0.6 percent extending a 1 percent decline last week. A preliminary index of U.S. service industries is forecast at 59.8 for July, the lowest level in three months, a Bloomberg News survey shows before a report from Markit Economics Ltd. The Federal Reserve is scheduled to review monetary policy at a two-day meeting starting tomorrow.

The average price for gasoline in the US dropped 9.04 cents in the two weeks ended July 25 to $3.5795 a gallon, according to Lundberg Survey Inc. The survey is based on information obtained at about 2,500 filling stations. Prices are 9.51 cents lower than a year ago and are at the lowest level since March 21, the survey showed. Plants are taking advantage of the U.S. shale boom, which has raised oil production 65 percent in the past five years. The increased output has pushed the price of West Texas Intermediate futures below European Brent every day since Aug. 17, 2010.

Crude inventories fell for the fourth straight week, dropping 3.97 million barrels to 371.1 million in the seven days ended July 18, according to the Energy Information Administration, the Energy Department’s statistical arm.

Natural gas continued to decline looking for its 2014 bottom giving up 9 points this morning to trade at $3.779. Speculators are fleeing natural gas after prices dropped below $4 for the first time since December and power plant production fell to a 13-year seasonal low. Prices slid as the output from electricity generators, the biggest consumers of the fuel, fell 11 percent in the week ended July 19 from a year earlier to the least for the period since 2001. Gas inventories, which declined to an 11-year low in late March, have rebounded at the fastest pace since 2001, U.S. Energy Information Administration data show.