Crude oil hit a high of 95.10 but eased down to trade at 94.71 in the Asian session. Crude oil futures were slightly lower Monday as investors grew wary about credit being tightened in China, the world’s second-largest oil consumer. Light, sweet crude for August delivery recently traded down 12 cents, or 0.13%, at 93.57 a barrel on the New York Mercantile Exchange. Investor fears about the growth of the Chinese economy grew after the People’s Bank of China, the country’s central bank, indicated that it was clamping down on easy-money policies. China is dominating the markets as investors focus on the reason and the effect of policy changes by the PBOC.
U.S. crude futures steadied above $93 a barrel, after falling for the past three sessions and posting their worst week since April amid worries over Chinese demand and U.S. economic stimulus being pared back. Market attention continues to remain focused on the US Fed, but China is weighing heavily and slowly taking center stage.
There was very little fundamental data on Monday, so markets moved on sentiment shifts and news flow, which was light also. The U.S Federal Trade Commission has followed the European Union in opening a formal probe into how crude oil and refined fuel prices are set, Bloomberg News reported on yesterday. Tanzania’s oil importers are seeking over 300,000 tons of oil products for delivery from late July to August, similar volumes to previous requirements, industry sources said this morning. Canada’s largest pipeline company was investigating on Sunday the cause of a 750-barrel spill of synthetic crude that forced it to shut three oil pipelines in northern Alberta. This was it for headlines yesterday and this morning.
U.S. natural gas futures ended lower for a third straight session on Monday, with milder forecasts for later this week and next week outweighing the heat currently blanketing the Northeast and Midwest. Natural gas is trading at 3.756. Natural gas remains in the headlines with more and more attention focusing on the use and demand for the cheap energy supply. Israel’s government on Sunday approved limiting natural gas exports to about 40 percent of the country’s newly-discovered offshore reserves.
A consortium led by Japanese trading house Itochu Corp is likely to agree as early as Saturday to build an LNG plant in Russia with Gazprom, the Nikkei newspaper reported, to meet Japan’s growing energy needs. Traders can expect prices to trade lower for the day on account of expectations of milder weather and increasing worries over the power demand in the US.