Oil Prices Continue To Remain Cheap

European Union governments meet to consider pulling the trigger on tougher Russian sanctions as the bloc weighs the viability of President Vladimir Putin’s truce in Ukraine. The talks in Brussels among the 28 member nations follow the EU’s abrupt decision this week to put on hold for at least a “few days” a second package of economic penalties against Russia over its encroachment in Ukraine.

With that said, crude oil tumbled on Tuesday to trade at 92.75 and gained a few cents this morning to move up to 92.95 while Brent oil continued to surprise falling well below the $100 level to touch 99.24 and regained 12 cents to reach 99.36 on Wednesday morning. The dollar retreated from a 14-month high against the euro as technical indicators signaled the U.S. currency’s advance has been too quick triggering technical selling. WTI oil prices on the NYMEX is trading higher by half a percent and trading although ample global supplies and slower-than-expected growth in the world’s top oil consumers is acting as a negative factor. Steady or growing output from Iraq and Libya, where investors had feared violence would cut production, and the shale oil boom in the United States as well as a stronger U.S. dollar have helped to depress the oil price. Crude oil prices are expected to trade lower as US is producing the highest amount of crude in last 28 years. Besides, profit booking at higher levels coupled with ample supplies in the energy markets will act as a negative factor.

U.S. crude futures rose for the second straight session on Wednesday after data showed a larger than expected drawdown in crude inventories in the world’s largest economy. .S. crude stocks fell by 1.9 million barrels to 359.million barrels in the week to Sept. 5, higher than analyst expectations for a 1.1 million barrel draw down, data from industry group the American Petroleum Institute showed. Crude oil production in the United States averaged 8.6 million barrels per day (bpd) in August, the highest level since July 1986. The EIA on Tuesday cut its 2014 world oil demand growth forecast by 80,000 barrels per day to 1.04 million bpd. Oil production at Libya’s al-Waha Oil Co, which supplies the eastern Es-Sider port, has risen to 114,000 barrels a day. Deeper and broader sanctions targeting Russia’s energy, financial and defense sectors over the crisis in Ukraine are being prepared by the United States.

US natural gas reversed course on Tuesday to trade just under $4.00 and eased a drop on Wednesday morning to trade at 3.967 as traders hoped on one last blast of hot weather. U.S. natural gas futures gained nearly 3 percent on Tuesday as the October front-month climbed with the cash market on forecasts for cool weather and some heating demand from the Northern Tier states along the Canadian border. Accuweather forecast cooler-than-normal temperatures over the central and eastern United States over the next 10 days.