Tag Archives: crude oil tips

Oil Continues to Fall in Asia

25 Jul

Oil futures traded modestly lower during Thursday’s Asian session, extending losses incurred during U.S. traded Wednesday.

On the New York Mercantile Exchange, light, sweet crude futures for September delivery fell 0.29% to USD105.29 per barrel in Asian trading Thursday despite some encouraging U.S. real estate data.

In U.S. economic news out Wednesday, the National Association of Home Builders/Wells Fargo builder sentiment index climbed to 57 this month from 51 last month. The July reading reading is the highest since January 2006. Readings above 50 indicate builders view the market as good.

New home sales advanced 8.3%, the best rate in five years. The seasonally adjusted rate was 497,000 units. Economists expected 484,000. May’s sales rate was also revised up to 459,000.

Even solid weekly inventories could not help oil higher in Asian Thursday. On Wednesday, the U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 2.8 million barrels in the week ending July 19, exceeding expectations for a decline of 2.4 million barrels.

Total U.S. crude oil inventories stood at 364.2 million barrels as of last week.

Traders appear to still be concerned about economic data out of China last night that serves as further proof manufacturing activity in the world’s second-largest economy is slowing. China’s HSBC manufacturing PMI fell to an 11-month low of 47.7 in July, from a final reading of 48.2 last month. Analysts had expected the index to rise to 48.6.

The U.S. and China are the world’s two largest oil consumers.

Elsewhere, Brent futures for September delivery fell 0.14% to USD106.91 per barrel.

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Oil Down Slightly in Asia

18 Jul

Oil futures traded modestly lower in the early part of Thursday’s Asian session as traders in the region digested a swath of key central bank and data points out of the U.S. Wednesday.

On the New York Mercantile Exchange, light, sweet crude futures for September delivery fell 0.14% to USD106.21 per barrel in Asian trading Thursday.

Crude traded slightly higher Wednesday in the U.S. after the U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 6.9 million barrels in the week ended July 12, blowing past expectations for a decline of 2 million barrels.

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Total U.S. crude oil inventories stood at 367.0 million barrels as of last week. The report also showed that total motor gasoline inventories increased by 3.1 million barrels, confounding expectations for an decline of 0.5 million barrels.

Oil also got a small lift after the Fed’s Beige Book business survey, which encompasses the central bank’s 12 regional banks, showed manufacturing expanded in most regions since the last report. The report showed modest growth across 11 districts with Dallas showing strong growth.

In other economic news out Wednesday, the Commerce Department said U.S. housing starts fell 9.9% to a seasonally adjusted annual rate of 836,000 unit in June, the lowest reading since August 2012. Analysts expected starts to rise to 959,000 units. Bad weather was cited as one of the reasons for the slack reading.

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Meanwhile, Angola, a member of the Organization of Petroleum Exporting Countries, forecast its daily output for September will be 1.67 million barrels, well below the 2 million barrels per day target. The country expects to pump 1.7 million barrels a day next month. Angola is Africa’s second-largest oil producer behind fellow OPEC member Nigeria.

This year, Angola has averaged about 1.72 million barrels per day in production, below the daily average of 1.9 million barrels for Nigeria. Angola is banking on new offshore discoveries to boost output in the future.

Elsewhere, Brent futures for September delivery inched down 0.04% to USD108.63 per barrel on the ICE Futures Exchange.

Commodity Bets: How to trade Crude, Gold, Zinc & Lead

2 Jul

Sreekanth Jha of PJ Commodity Ventures suggests buying crude at Rs 5,800 per barrel for target of Rs 5,900 per bbl.

N Prasad of Safetrade Advisors recommends buying MCX gold at Rs 28,850 per 10gm with stop loss at Rs 25,600 per 10gm for target of Rs 27,170 per 10gm to Rs 27,200 per 10gm.

Reena Rohit of Angel Broking advises buying zinc July contract at Rs 110 per kilogram with stop loss at Rs 109 per kilogram for target of Rs 111 per kilogram on the upside.

Sugandha Sachdeva of Religare Commodities advocates going long on lead MCX July series at Rs 122 per kilogram with stop loss at Rs 120.50 per kilogram for targets of Rs 125.5 and Rs 126 per kilogram in near term.

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Brent hovers near 10-week high, Fed meeting in focus

18 Jun

Brent crude futures were barely changed around USD 105, holding not far off their strongest level in 10 weeks, as investors remained cautious ahead of a US Federal Reserve meeting.

The Fed, whose two-day policy meeting starts on Tuesday, is under pressure to roll back some of the USD 85 billion in monthly bond purchases after advances in the US economy. Its three quantitative-easing schemes have buoyed prices of commodities.

At 0446 GMT, Brent was up 5 cents at USD 105.52 a barrel. It rose to 106.67 on Monday, the highest since April 4, on mounting tensions in the Middle East. US oil added 5 cents to USD 97.82 after hitting a nine-month high near USD 99 a barrel in the previous session.

“What I’m expecting is some indication of a slow, measured tapering of the bond-purchase programme by the Fed. It will cause some impact to markets at the start but I’m looking for minimal slippage at least for oil prices,” said Carl Larry, president of Houston-based Oil Outlooks and Opinions.

“In general any decision to taper would signal confidence in the ongoing recovery of the US economy, that is potentially an upside for markets depending on how investors take it.”

Global financial markets have been on edge since Fed Chairman Ben Bernanke suggested the central bank would be looking to taper its stimulus if the economy showed signs of improvement.

The oil market is also keeping an eye on a standoff over the civil war in Syria as world leaders lined up to pressure Russian President Vladimir Putin into toning down his support for Syrian President Bashar al-Assad on the second day of a G8 summit.

Although Syria is not key to global oil supply, investors are worried the civil war there could affect other countries in the Middle East and plunge the whole region into conflict

Any run-up on geopolitical risk would soon bump into a fundamental situation of ample supply and uncertain demand.

Stung by recent victories for Assad’s forces and their support from Hezbollah guerrillas, the United States said last week it would step up military aid to the rebels, including automatic weapons, light mortars and rocket-propelled grenades.

“The market has certainly built in a risk premium into prices, and this should keep it supported despite fundamentals suggesting that there is more than enough oil out there to buffer a disruption to any kind of supply from the region,” said Larry of Oil Outlooks and Opinions.

“But until we see some clear consensus between the likes of Russia and the US we shouldn’t expect to see an end in sight in Syria and that keeps the risk of the conflict spilling over and drawing in other regional entities much higher.”

US commercial crude oil stocks are expected to fall due to lower imports, according to a preliminary Reuters poll done on Monday.

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What factors may influence Japanese Oil demand for the rest of 2013

10 Jun

“Although this (oil consumption) is extremely high, the situation is normalising with crude oil consumption for generation down 27% y/y while fuel oil demand for the same purpose has decreased 22% y/y. We expect this downward trend in crude oil and fuel oil usage to continue over H2 13,” Barclays estimated.

The Fukushima nuclear power plant crisis did take at least 48 of the 50 nuclear reactors in Japan offline in a stage-by-stage manner resulting in heavy reliance on crude oil and its distillates for power generation. But, so far into this year, Japanese demand for oil has “normalised” as strong numbers have dissolved into thin air. This is primarily due to the following set of reasons:

–Decreased industrial demand: Q1 Industrial Production average of Japan was 5.9% lower y/y which made a dent on the electricity generation and consumption figures.

–Fall in heating demand: Higher temperatures from late March to early April prevented a surge in heating demand.

–Nuclear power capacity making a comeback: The share of nuclear power in Japan’s energy mix has increased from 2% to 5.3%.

–High base usage and limited capacity expansion for oil-powered facilities.

Weird stats

It is opportune at this moment to recall some statistics in this regard:

–As mentioned earlier there had been 50 reactors in Japan functioning before the nuclear disaster.

–These reactors generated about 22.62 mn MWh at the end of 2010. The actual capacity of the reactors was double the number!

–As the plants were shut down one-by-one in Japan, the power generation figures dropped to 1 million MWh, a 96% drop compared to 22.62 million MWh!

–Recent days have seen the generation climbing to 1.76 million MWh

–April saw Japan burning 220% additional crude oil and 94% in extra fuel oil compared to pre-Fukushima levels.

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“It is unclear how many reactors will be coming back online or how many will have to be decommissioned permanently based on the findings of the regulation authority,” Barclays said in the report on Japanese oil demand. Hydro and thermal sources are now sharing the power generation burden of Japan these days.

“Although this (oil consumption) is extremely high, the situation is normalising with crude oil consumption for generation down 27% y/y while fuel oil demand for the same purpose has decreased 22% y/y. We expect this downward trend in crude oil and fuel oil usage to continue over H2 13,” Barclays estimated.

So, what will influence one of the biggest economies in the planet in the second half of the year as far as crude oil demand is concerned?

Influencing negatives

Weakening of Japanese Yen: As Japanese Yen has weakened to 100 for a Dollar, compared to 80 last year, Japan’s crude import basket has turned out to be very expensive. For instance, March 2013 had seen the basket becoming most expensive since October 2008 breaking the 10500 mark and reaching 10875 for the month. The highest this basket has come to rule was at 14627 in August 2008. (But that was primarily due to a rally in underlying crude oil prices.)

Needless to say, importers of Japanese crude and fuel oils have begun to feel the heat of purchase. This should be read in the context of a possibility of range-bound trade in crude oil in the days to come.

Meanwhile forex market strategists at Barclays, “expect USD/JPY to rebound to 103 over the next 3-6 months because they expect it to be a bellwether if the government’s policy for targeting higher inflation is credible. Additionally, they expect the US economy to gain strength in H2, 13 and support market expectations of Fed tapering, leading to broad USD strength.”

Not good news for Yen bulls as well as crude oil importers in Japan.

Potential nuclear renaissance: It is clear that liberal democrats who are in power in Japan, especially, the Japanese PM Shinzo Abe want to push the start button in nuclear reactors, as and when the regulatory authorities give a green signal. The measure is deemed important by Abe and his team as only then would his party be able to carry out its economic agenda and secure their long term interests.

But the ride may not be smooth. On June 2, thousands of protesters took to streets in Tokyo in defiance of the Abe’s plan. They have alreadyc collected almost 8 million signatures against it. Meanwhile a nuclear plant in Tsuruga was found to be sitting on a fault line and thereby susceptible to earth quakes making its chance of getting approved almost nil.

“The authorities will continue to review plants and applications for potential restarts, though Abe’s push for imminent wide-scale nuclear power seems highly unlikely,” Barclays said in the report.

Influencing positives

Diesel cars and Abenomics: Diesel cars are becoming much more popular in Japan as the they increasingly turn out to be eco-friendly and subsidies for clean diesels kick in. No wonder Japanese gasoil demand has jumped 2.5% year-to-date.

“Last year, the higher call on fuel oil and crude for power generation trumped the negligible flat growth in gasoline, kerosene and gasoil. This year, we expect these refined products, particularly gasoil, to produce a slightly more measurable rate of growth,” Barclays said in the report.

However, domestic sales of new cars in Japan as well as trucks and buses have been falling by 7.3% y/y in May even as the drop may not be as steep as had been expected.

Meanwhile, with Abenomics under work, Japanese real GDP growth is expected to see annualised gains of 3.5%-3.7% over the four quarters starting second quarter in 2013 as Yen weakens further and fiscal spending climbs along with wealth effect taking routes on equity rallies.

All these factors can positively contribute to oil demand growth in Japan.

SPR sales: In a bid to replace heavier grades of crude oil with lighter ones–given the improved appetite for latter–Japan’s METI sold about 4.4 mb of crude from the country’s Strategic Petroleum Reserves.

The ministry is estimating to buy back 6.29 mb of light grades, saying they are waiting for the right moment. If carried out over a two-month span, it would boost imports by an additional 104 thousand b/d.

“In our view, given further depreciation of the yen expected…we would not be surprised if they come into the market sooner rather than at the tail end of the year,” Barclays said.

Taking all of these factors into consideration, Barclays expects Japanese oil demand growth to come down by a marginal 0.03 mb/d or 0.63% in 2013.

Oil price near $95 ahead of US jobs report

7 Jun

Oil rose modestly Friday ahead of the release of a key US jobs report that traders will examine for clues to the health of the US economy.

Benchmark oil for July delivery was up 14 cents to USD 94.90 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract gained USD 1.02 to finish at USD 94.76 a barrel Thursday.

The US Labor Department will release its employment report for May later in the day. A good result is expected, following a drop in jobless claims reported on Thursday.

Oil prices were also being supported by a weaker dollar and a bigger-than-expected drop in crude inventories reported by the US Energy Department and the American Petroleum Institute for the week ending May 31, said Matt Basi at CMC Markets in a commentary.

crude oil tips | natural gas tips

Brent crude, a benchmark for many international oil varieties, rose 17 cents to USD 103.78 a barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex:

Wholesale gasoline was steady at USD 2.851 a gallon.

Heating oil added 0.8 cent to USD 2.879 per gallon.

Natural gas dropped 0.8 cent to USD 3.819 per 1,000 cubic feet.

Crude shoots up on weaker dollar, North Sea supply snags

4 Jun

Oil prices shot up on Monday after U.S. data sent the dollar plunging, while reports of supply snags in the North Sea pushed up prices even further.

A weaker greenback tends to make oil a nicely priced asset in dollar-denominated exchanges, especially in the eyes of investors holding other currencies.

On the New York Mercantile Exchange, light sweet crude futures for delivery in July traded up 1.58% at USD93.43 a barrel on Monday, off from a session high of USD93.68 and up from an earlier session low of USD91.29.

A falling dollar made oil a nice buy on Monday.

The Institute for Supply Management said earlier its manufacturing purchasing managers’ index for the U.S. fell to 49.0 in May from 50.7 in April.

Analysts were expecting an unchanged reading.

On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.

The numbers sent oil gaining on sentiments that the Federal Reserve will keep stimulus tools in place that keep the greenback weaker to spur recovery.

Meanwhile in Europe, better-than-expected PMI data further weakened the dollar and sent oil gaining.

The eurozone’s manufacturing PMI improved to 48.3 from 47.8 in April indicating that the slump in the manufacturing sector is easing, according to London-based Markit Economics.

Germany’s manufacturing PMI was revised up to 49.4 in May, beating market calls for a 49.0 reading.

Reports of supply snags in the North Sea sent Brent futures soaring.

Platform operator Nexen reported earlier equipment failure will cut output in the Buzzard oilfield until later this week.

On the ICE Futures Exchange, Brent oil futures for July delivery were up 1.73% at USD102.13 a barrel, up USD8.70 from its U.S. counterpart.

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