The EIA, OPEC, Obama And Iran All In Play

The EIA, OPEC, Obama And Iran All In Play
The EIA, OPEC, Obama And Iran All In Play
Crude oil declined as the markets opened for a new week, dropping 21 cents to trade at 94.28 while Brent oil only gave up 7 cents to trade at 108.30. The spread widened to $14.00 well passed its average gap of $12.00 indicating that WTI crude oil might be getting ready to climb. “The Brent premium could easily continue to grow because of the North American supply picture,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “I would hate to stand in front of a runaway train, which is what the WTI-Brent spread is right now.” WTI crude oil prices dipped around 0.8 percent in the last week on the back of rising trend in API and US crude oil inventories. In the U.S., the world’s biggest oil consumer, crude stockpiles rose to 388.1 million barrels in the seven days ended Nov. 8 as output surged to the highest rate since January 1989, the Energy Information Administration said last week. The EIA is the Energy Department’s statistical arm. The EIA expectations that US to be world’s biggest crude oil producer by 2015 exerted downside pressure on prices. Additionally, a surprising decline in GDP data from Eurozone led to estimates of decline in demand for fuel acted as a negative factor.

 At the end of the week statement from Federal Reserve nominee Janet Yellen to continue with stimulus measures until improvement is seen in US economy coupled with weaker DX cushioned sharp downside in prices. Crude oil prices touched a weekly low of $92.51.

News from OPEC in the Joint Organizations Data Initiative (JODI), data published over the weekend showed that Saudi Arabia exported the most oil in last eight years. Saudi Arabia produced around 10.12 million barrels in October as against 7.84 million barrels in September increasing the global supplied and weighing on Brent oil prices.

Brent oil rose 3.2 percent this week after a meeting between Iran and Western Allies concluded last weekend in Geneva without coming to an agreement on the nation’s nuclear program, tempering projections of a resolution to the dispute that has cut Iranian oil exports. The talks with the five permanent members of the UN Security Council and Germany will resume Nov. 20.  Brent oil is more sensitive to potential changes in Middle East output than WTI because Europe depends more on the region’s production. President Barack Obama commented at a White House news conference that he supports giving Iran “modest” relief on sanctions in exchange for progress on nuclear talks and urged Congress to hold off on imposing more economic penalties.

Natural gas is trading at 3.681 adding 33 points this morning as the US turns cold over the weekend, increasing residential demand for heating. On a weekly basis, Nymex natural gas prices gained around 0.4 percent on the back of forecast for cooler winter weather conditions. Also a less than expected rise in inventories supported an upside in prices.  Additionally, weakness in the US dollar index acted as a positive factor. Gas prices touched a weekly high of $3.667 and closed at $3.534 in last trade of the week.

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