Crude oil demand continues to wane while production continues to increase pushing prices to recent lows. Crude oil is down on Tuesday morning by another 20 cents trading at 93.48 while brent crude fell below the 108 level to trade at 107.96 off by 25 cents. The spread continues to widen moving towards the $15 differential. The US dollar has eased over the past two days, but does not seem to be helping support oil prices as the global glut continues to deepen. Crude oil prices fell on Monday as investors awaited the meet between Iran and western nations starting Nov 20 on a possible deal on the nuclear program. Over the weekend, US President Obama said that he would support an easing of sanctions against Iran as a first step in improving the relations with the West and opening Iran’s nuclear projects to inspection. All indications are that we should see the first steps completed at this week’s meeting. This would open Iran oil to the global marketplace increasing international supplies and would weigh heavily on brent oil prices.
Also, Saudi crude production rose close to 10 million bpd, the highest average level sustained over a four-month period. Rising production from Saudi Arabia amid the shale gas boom and soaring inventories in US have put additional pressure on crude prices, ignoring the supply disruptions from Libya. Russia expects its 2014 oil output, the world’s largest, to meet or slightly exceed the 520 million tons forecast this year, Anatoly Yanovsky, deputy minister at the Russian Ministry of Energy, told Reuters on Monday.
Nymex crude oil prices declined around 0.9 percent yesterday on the back of estimates of decline in demand for fuel after statement from Federal Reserve Bank of New York President William C. Dudley added to speculation that the central bank will reduce stimulus. Further, mixed market sentiments exerted downside pressure on prices. The American Petroleum Institute is scheduled to release its weekly inventories later today and US crude oil inventories are expected to increase by 0.1 million barrels for the week ending on 15th November 2013. Gasoline stocks are expected to gain by 0.2 million barrels and distillate inventories are expected to slip by 0.4 million barrels for the same week. Traders will wait for Wednesday official inventory release from the EIA but any climb in stocks will weigh heavily on prices.
Natural gas continued to climb this morning making a surprise chart upwards over the past few days. Natural gas is trading at 3.621 as cold weather continues across the US, signs of an early winter increasing heating days for the year. U.S. natural gas futures ended lower on Monday as profit booking emerged at resistance levels. Prices are expected to remain in range today.