Crude oil is down 23 cents this morning trading at 93.62 after hitting recent lows yesterday. Brent oil added close to $1 yesterday as news indicated that a deal with Iran would not happen at this week’s meeting. Brent oil is trading at 107.75 down by 12 cents this morning adjusting for yesterday’s climb.
Bloomberg’s most recent report on commodities painted a pretty bleak picture for commodity prices in the near term. While downside risks for energy prices will increase next year, the outlook is more stable than for iron ore, gold and copper, Goldman said in yesterday’s report. Brent crude is seen at $105 a barrel at the end of 2014 from $107.76 this morning.
“We expect the long-awaited shift towards above-trend growth in the U.S. finally to occur, spurred by acceleration in private consumption and business investment,” the Goldman analysts wrote yesterday. At the Fed, “we expect a gradual tapering in bond purchases to begin, most likely in March.”
The U.S. economy may expand 2.6 percent in 2014 from 1.7 percent growth this year, according to the median of analysts’ estimates compiled by Bloomberg. Retail sales climbed in October by the most in three months, data showed yesterday.
In China, the largest consumer of everything from iron ore to copper, economic growth is seen as stable this year after a slowdown in mid-2013 reversed, Goldman said. The preliminary reading released today of a Chinese Purchasing Managers’ Index for November was 50.4, the first decline in four months for the gauge from HSBC Holdings Plc and Markit Economics.
WTI slid as much as 0.5 percent in New York. The Federal Reserve may pare its $85 billion in monthly bond purchases “in the coming months” as the economy improves, according to minutes released yesterday from the Federal Open Market Committee’s most recent meeting. U.S. crude stockpiles climbed to the highest level since June, government data show. US oil prices advanced 2.5 percent on Sept. 18, the most in three weeks, after the Fed said it would maintain monthly bond purchases to stimulate growth. The U.S. will account for about 21 percent of global oil demand this year, data from the International Energy Agency in Paris show.
Fed Board members “generally expected that the data would prove consistent with the Committee’s outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months,” according to the record of the FOMC’s two-day gathering that ended Oct. 30.
Natural gas on the other had is flat this morning but continues to trade at the top of its recent range. Natural gas is holding at 3.67 after cold weather blankets the US and the weather forecast for the rest of November and early December showed colder than expected temperatures. Yesterday’s inventory release showed that gas supplies totaled 3.834 trillion cubic feet in the week ended Nov. 8, EIA data show. Inventories were 1.5 percent above the five-year average and down 2 percent from a year earlier. The five-year average stockpile drop for the week ended Nov. 15 is 2 billion cubic feet, according to the EIA. Supplies fell 36 billion in the same period last year.