Crude Oil Set To Break $98.00

Crude Oil Set To Break $98.00
Crude Oil Set To Break $98.00

WTI light sweet crude oil is trading flat in Asian trade this morning at 97.89. Oil touched a three-month high yesterday after better-than-expected economic data out of Europe spurred optimism about the global economy before oil pared gains with surprisingly weak U.S. growth numbers. Crude oil prices climbed close to $98 per barrel, getting an added boost after the US Federal Reserve kept its easing stance as expected, while gasoline futures rallied past $3 per gallon on the heels of a surprise drop in inventories. U.S. crude oil inventories jumped by 5.95 million barrels in the week to Jan. 25, the U.S. government said. Analysts had forecast a 2.6-million-barrel crude build. The US dollar weakened also helping to support crude’s price climb.

But the recent run of economic optimism overshadowed the inventory numbers and weak U.S. data. Eurozone economic sentiment improved more than expected across all sectors in January, rising for the third month in a row in a sign that the region’s economy could be emerging from a low point in the fourth quarter of 2012.

Oil markets took the U.S. Federal Reserve’s announcement positively that it would maintain its monthly $85 billion bond-buying stimulus plan. US GDP contracted by 0.1% in the 4th quarter and unemployment still remains at 7.7% which is well above the Fed’s comfortable level of 6.5%. This has forced Fed to continue its bond buying program weighed on energy products. Brent crude touched a three-month high, after a better-than-expected economic data out of Europe spurred optimism about the global economy before oil pared gains with surprisingly weak US growth numbers.

Crude oil stocks rose by 5.947m barrels and total motor gasoline inventories moved down by 1mn barrels. Iran’s crude oil exports in December rose to their highest level since European Union sanctions took effect last July, mainly due to strong Chinese demand while tanker fleet expansion helped the OPEC member dodge sanctions.

Natural gas rose more than 2%, ahead of a weekly government data due later today that  is  expected  to  show  a  steep decline in US gas stockpiles. Natural gas inventories are expected to decline by 207-210bn cubic feet, actual data will be released by EIA later in the day. Natural gas prices are likely to go up as weather forecasts call for colder weather in the next few days and lower inventories can also support prices. Gas futures on the New York Mercantile Exchange ended up 7.7 cents, or 2.4 percent, at $3.335 per million British thermal units after trading between $3.261 and $3.344. Natural gas is trading this morning at 3.349 adding 9pts.

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