Oil Up Almost 20% In One Week

Crude oil prices are down 10 cents in the morning session, gaining little benefit from the harsh fall of the US dollar. Crude oil is trading at 46.80 while Brent oil is holding flat at 49.17 unable to break the $50 level.  Global oil fell Thursday, resuming their slide after a brief spike following the Federal Reserve’s announcement that it would leave U.S. interest rates unchanged.

Economists saw about a one-in-four chance of a rate increase. The dollar eased ahead of the announcement. A weaker U.S. currency can be supportive to dollar-denominated commodities like oil.

Both U.S. crude and Brent extended losses ahead of the announcement. After the decision was announced, U.S. crude darted into positive territory while Brent pared losses. Within 10 minutes, both benchmarks relinquished gains.

The CBOE oil volatility index .OVX fell ahead of the announcement but jumped nearly 15 percent in the minute after the decision. It traded more than 9 percent lower in the day by crude oil settlement.

“The oil market will go back to watching to see if the economic slowdown in China spreads to other economies and whether low oil prices start to lower U.S. oil production significantly,” said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.

Analysts suggested a weaker dollar would provide some support to crude oil prices, which were pressured early on Thursday after weak Japanese data revived fears over the prospects for global growth.

Japan’s exports slowed a second straight month in August, a sign that China’s economic slowdown could be damaging the world’s third-biggest economy. The Japanese figures followed worrying data from other Asian economies, including South Korea and Taiwan, creating anxiety over possible effects of slower growth in China.

Oil markets were weak on Friday as fresh signs OPEC will continue to value market share over prices outweighed expectations of a lift when the United States kept interest rates at historic lows. uwait, a key producer of the Organization of the Petroleum Exporting Countries (OPEC), said on Thursday the oil market would balance itself but that this would take time, indicating support for the group’s policy of defending market share despite falling prices.

Other sources at OPEC backed this view saying they expected oil prices to rise by no more than $5 a barrel a year to reach $80 by 2020, with a slowing in rival non-OPEC production growth not enough to absorb the current oil glut.

Natural gas is down 3 points on Friday morning seeing no boost from the fall of the US dollar. NG is trading at 2.647 after the weekly EIA inventory report. In its weekly report the Energy Information Administration said natural gas storage in the week ended September 11 rose by 73 billion cubic feet, in line with expectations Total U.S. natural gas storage stood at 3,334 bcf the EIA said. Stocks were 456 bcf higher than last year at this time and 125 bcf above the five-year average of 3,209 bcf for this time of year. EIA data shows that power plants account for approximately 32% of gas demand in the U.S. Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use.