Crude Oil in a Crisis Marketplace

The Asian equities are also down by more than a percent owing to weak services PMI numbers from China and lower demand for vehicles and durables around the globe. Today, from Euro-zone the German chancellor may meet the European commission ahead of the EU Summit to discuss regarding the issuance of common Euro-bonds and recapitalization of Banks. From the economic data front, the Euro-zone confidence may deteriorate further while producer price index may decrease slightly after lower CPI and may continue to weaken the shared currency and commodities. The US factory orders might also remain fragile after weak ISM and non-farm and may continue to weaken commodities for the day. Overall, weak equities and concerned Europe may continue to drag down base metals in today’s session.  

During early Asian session crude oil futures prices are hovering below $82.50/bbl with fall of more than 1.3 percent in electronic platform. Concern of lower demand due to prevailing global economic concern from major oil consuming nation are basically pressurized oil prices to fall continuously. Most of the Asia equities are trading down as a reaction to the lower payrolls data and contraction in ISM index released from US. In addition to this, lower PMI manufacturing index reported from China is also creating speculation of lower oil demand. China bound crude shipments seen falling 13 percent last week. Citi group cut down the crude price forecast for the U.S. benchmark West Texas Intermediate (WTI) by USD 11 to USD 95 per barrel for 2012 and by USD 28 to USD 85 per barrel for 2013.

Today, market will be eyeing on EU commission meet with German on Spain bank capitalization on table, which may keep Euro under pressure. We may expect oil futures prices to trade under pressure by taking negative cues from the above discussed factors, however little pull back is expected during US session on expectation of improving factory orders.

Currently, gas futures prices are trading below $2.340/mmbtu with gain of more than 0.60 percent futures platform. As per US Energy department, Demand from Residential sector is expected to decline in comparison to last year, as this year summer season is going to be less severe on account of lower number of Cooling Degree Days expectation, reported by EIA. Currently, the storage level is at 2815BCF, positioned storage volumes 732 Bcf above year-ago levels. In the coming week, also the injection level is likely to increase on the back of rising supply and lower demand, which may weigh on gas prices. Most importantly, As per National Hurricane Centre, as of now there is no tropical storm formation is seen in North Atlantic region. 

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