Oil futures prices for the month of October Delivery are hovering below $95/bbl with loss of almost 0.50 percent in electronic platform currently. Crude oil futures closed higher after a very range-bound session, as traders feared the impact of Hurricane Isaac on the Gulf of Mexico’s oil production. Isaac strengthened into a Category 1 hurricane and was expected to reach the coast of Louisiana today. A Group of Seven finance ministers issued a statement saying they were ready to call on the IEA to take appropriate action to ensure the market was fully supplied and that they remain vigilant toward risks to the global economy posed by elevated oil prices.
Crude oil inventories rose 5.5mn barrels, gasoline stocks declined 2.4mn barrels and inventories of distillates rose 1.4mn barrels, in the week ended Aug. 24, as per the American Petroleum Institute. As per American Petroleum Institute, crude oil stocks have climbed up above 5 million barrels in the last week as imports have increased by more than 17 percent with continuous rising production.
The unexpected rise in oil stocks might have weigh on oil prices. As per National Hurricane Center, Hurricane Isaac is producing a dangerous storm surge along the northern Gulf Coast with rainfall. Companies halted 93 percent of oil production in the Gulf of Mexico as Isaac neared the coast of southeast Louisiana, the Bureau of Safety and Environmental Enforcement said. Six Louisiana refineries were shut, idling 6.7 percent of U.S. capacity, and three were running at reduced rates.
There is another storm forming in North Atlantic named KIRK. So, concern of supply disturbances may keep prices on higher side. The EIA is planning to release reserves to fulfill the demand if any scarcity happens. The US Energy department said, crude oil and gasoline stocks are likely to decline in the last week. Actual data will be released this evening. Ahead of the crucial inventory report markets are looking at Beige book release and US GDP data we may expect oil prices to trade in a positive trend though volatility can be seen in US session.
Currently, most of the Asian equities are heading towards the upside amid speculation of increasing GDP for the US economy.
Hope from ECB on easing and action is pushing the shared currency on higher side, ahead of Italy’s six month’s T-bill auction today and 7.5 billion euro tomorrow. Speculation of ECB buying bonds may cap the borrowing cost for nations in the region. Overall, we may expect oil futures to trade on a positive trend, though technical correction is expected in between.
At present natural gas futures are hovering above $2.604/mmbtu with loss of more than 0.30 percent from yesterday’s closing. Ahead of expiry day in international market, we may expect gas prices to remain under pressure due to increasing storage level expectation. As per US Energy department, natural gas storage is likely to increase by more than 63 bcf, which may weigh on prices. Although the fundamental concerns for crude oil also hold true for natural gas. Also the Energy Department has said that natural gas demand has been on the decline by more than 5 percent in the last week.