Crude oil eased 10 cents this morning as traders sold off to book profits after the strong rise in prices since Monday. With the FOMC meeting and press conference later today, there are possibility for strong volatility in prices, as traders moved to the side lines. Crude remains high at $98.58. Yesterday crude oil continues to climb as the heat is turned up in Syria. Crude oil is trading at $98.82 adding 74 cents.
President Barack Obama authorized support and arms for Syrian rebels, increasing tensions in an oil-saturated region. Although Syria is not a major oil-producing country, it does boarder Iran and Iraq which produce about one-fifth of OPEC’s oil output. The value of the dollar fell last week, providing further support for the increase in oil prices. Continued demonstrations in Turkey also supported prices as traders are stressed that there could be spillover into oil producing nations. Escalating tensions in Middle East after heavy fighting was reported in Aleppo, Syria’s biggest city also supported crude prices on fears of supply disruption if other Middle Eastern nations were drawn into the Syrian conflict.
Yesterday the American Petroleum Institute’s weekly report showed a drop in supplies. Crude oil supplies dropped by 4.3mn barrels, while gasoline inventories increased by 900,000 barrels, and distillate stockpiles dipped by 600,000 barrels.
In international news Russia is steeply ramping up oil deliveries to China, with Asia now importing almost a fifth of oil exports from the world’s largest crude producer in a strategic shift meant by the Kremlin to end reliance on weak and saturated European markets. Russia will increase oil supplies to China by 13 per cent in July-September from the previous three months, a shipping schedule obtained by Reuters showed on Tuesday.
U.S. natural gas futures ended higher on Tuesday, driven by forecasts for hotter weather in the Northeast and Midwest that should increase the demand for gas for air conditioners. Forecasters upgraded their expectations for hot temperatures in the coming weeks, which can to a higher electricity demand. Natural Gas is expected to move up on back of increased cooling demand for gas. Gas futures on the New York Mercantile Exchange ended up 3 cents, or 0.8 percent, at $3.905 per million British thermal units after trading between $3.865 and $3.952. Natural gas is continuing to climb this morning adding 3 points to trade at $3.915