This morning WTI crude oil is trading at $94.25 after topping 94.50 yesterday. WTI crude oil futures ended higher on Monday, as start‐up of the expanded
Barack Obama has urged Congress to increase the debt ceiling and stated that failure to act could bring turbulence to the financial markets. He further elaborated that the consequence of the same would lead to drastic decline in US markets and effectively interest rates would spike. With the US being the largest consumer of crude oil, uncertainty and economic troubles could weigh on the commodity, but at this time markets are paying little attention to Obama’s words. Yesterday’s hawkish statement given by Fed Chairperson Ben Bernanke on economy of the US is creating concern of fuel demand. With lower capacity utilization by the refineries stocks of crude and petroleum are also likely to increase in tomorrow’s inventory report. Therefore, oil prices have taken negative cues out of the above factors, despite an upside trend is seen in major Asian equity market
Late last week OPEC and the Saudi’s announced a reduction in production to help lower the world glut of oil and to support prices. This too had little effect at the time but seems to be helping support higher prices at present. Also the huge stimulus bills in Japan are pushing up prices as infrastructure projects will increase demands for oil.
Traders can expect oil prices to gain on expectation of positive economic releases from the Euro-zone and the US. Economists expect the eurozone trade balance to increase in the month of November which may keep oil prices on higher side. Besides, the US advance retail sales, empire manufacturing for the month of December may show an improving picture of the economy.
Natural gas prices are continuing its upside move near $3.39. Expect gas prices to remain in a positive trend on speculation of higher winter demand for space heating purpose. According to MDA weather service meteorologist, weather is likely to remain colder than normal in the current week which may drive higher demand. The low in Chicago on Jan. 22 may be 10 degrees Fahrenheit (minus 12 Celsius), 8 lower than normal, according to AccuWeather. However, nuclear output in the US has increased to the highest level in almost a week as Entergy Corp. boosted output at a reactor in Mississippi and the Tennessee Valley. As long as the US dollar remains weak there should be upward price movement ahead of this week’s inventory.