Increase in oil price

Oil prices rose on Wednesday 24^th August 2011. Benchmark West Texas crude rose 75 cents to $86.19 per barrel in New York, while Brent crude was up $1.34 at $110.65 per barrel in London.

The Government reported that orders for long lasting, durable goods like autos and aircraft increased 4% in July, the biggest increase since March this report increased the price. Another reason for increase in a price is the nation’s oil supplies dropped by 2.2 millions barrel by last week.

SEB Commodity Research said that, oil prices could drop temporarily if the crisis in the oil-rich North African nation eases or if strongman Muammar Gadaffi is caught. “Markets have really held back their gains today”. Price initially shot higher on Wednesday after the release of data showing US durable goods orders. Oil and gas companies have successfully diversified their upstream business line. According to Edinburgh based Wood Mackenzie released on Monday, unconventional oil and gas, liquefied natural gas, and deep water oil and gas now make up about 50% of the future value of the international energy  giants, which is a Whopping $3.2 trillion.

As oil price is falling in New York the price pf dollar is increasing and the gold plunged the most in more than three years. Goldman Sachs analyst believe that the oil prices will rise in the next year, they told that the risk of US recession has risen, but their revised US economic outlook remain consistent  with a recovery at a slower pace, “which is typical following a housing bust.”

After seeing oil prices, investors must grapple with political protests in the world’s top oil exporter, Saudi Arabia, and the impact of the biggest earthquake on record to strike Japan. In coming week, crude market will be looking for clearer information on the condition of the Libyan oil and gas infrastructure says Sanjeev Gupta.

Oil Enters a new Phase with the Libyan crisis heating up

On August 25, 2011: U.S supply report gave mixed signs about the demand for crude oil after this report oil prices hovered above $85 a barrel in Asian market. There is an extreme fluctuation in oil prices over the last few months.

US economy slowed sharply in the first three months of the year as high gas prices cut into consumers spending. Inventories of gasoline jumped 6.4 million barrels last week and distillates rose 2.0 million barrels. Prices have fallen from near $115 in May. BNP Paribas said in his report that the market has gone through a shift with the emergence of talk of double dip recession.

A major reason for the slump in oil prices is the economic austerity measures adopted by European countries. Oil has fallen recently along with stocks because of concern about the global economy. France gets 2.5% of its global production from Libya, is seen as a particular threat due to France leading role in international community to the rebel cause.

World economic growth has been revised down to 3.7%  in 2011 to 4.0% in 2012.this was mainly due to revision in the US forecast, which was cut to 1.8% from 2.5% in 2011 and 2.3% from 2.9% in 2012.

Product market sentiment showed a moderate recovery last month, with product cracks moving upwards across the globe supported by stronger Latin American import requirement. Gasoline demand has been weaker then expected in the Atlantic basin. Economies’ worries have affected the oil demand in the US; the aggregate oil demand will see a further decline this year.

Markets continue to monitor developments in Libya in order to asses how quickly oil production in the country would return to pre-war levels.

Oil fluctuates while Economies Watch Out

August 24, 2011: Market analysts are closely watching the price of crude oil because of the uncertainty associated with it brings frequent fluctuations. American petroleum institute said that crude inventories fell 3.3 million barrels last week. The energy information arm of McGraw hill Cos. had predicted an increase of 2.0 million barrels.

Oil prices rose on Tuesday as traders monitored the crisis in oil rich Libya, with rebels claiming victory and capturing Moamer kadhafi’s heavily fortified compound. Today oil prices hovered above $85 a barrel in Asia after a U.S supply report gave mixed signs about demand for crude.  

Banks had lowered their average crude price forecast- to $92 for the third quarter and $98 for the fourth quarter. Lipow said that The European refineries have struggled to make up for the production loss despite an increase from Saudi Arabia. As a result, European market should see the first and most significant drops in oil prices.

As oil is traded in dollars it tends to rise as the greenback weakens and makes crude less expensive for investors holding foreign money. The dollar dropped after the report that manufacturing activity in China and Europe was better than expected.

Benchmark West Texas Intermediate crude, for October delivery witnessed a rise by $1.67% or 2%, to $86.9 per barrel in afternoon trading in New York.  

 A report by the Goldman Sacs Group Inc. points to seriously “tight supplies” in the year 2012, and laments on the fact that not much can be done about this, because increasing production from countries like Saudi Arabia also seems rather difficult.

Oil Prices Plummet further raising concerns

August 18, 2011: The end of the third week of August saw oil prices plummeting further to touch a $81 a barrel in Asian Markets, this was parked off by a growing concern that the slowing down of the global economy would further undermine the crude oil’s demand in the market. 

The weakening US economy was the prime reason behind the tumbling markets. There are apprehensions that the US economy is heading towards recession, has resulted in a steep fall in the commodities especially oil. Crude oil sales dropped to an all time low since last two years, in Philadelphia- area manufacturing. 

Investors’ sentiments further played on with the concerns of growing EU’s debts and that the European banks may have difficulties in funding. Experts are apprehending further falls in the commodity markets, due to newer financial shocks. The world economy seems to be tumbling without little signs of recovery until the oil prices weaken further. 

London witnessed a fall in Brent crude by $1.53, reaching 4105.49 a barrel, as listed in ICE Futures exchange. US Crude CLc1 fell by 2%, arriving at stalling $79.17 a barrel, averaging down to an altogether of 16% for this entire month so far, a record fall since December 2008.

In the midst of falling oil prices, safer assets like gold witnessed a record all time high since two years. Gold however would ride the high tide, with more disappointments emanating from the markets. 

The markets especially crude tripping further down makes, Tony Nuanan, manager of risk at Mitsubishi Corp Japan, remark that the downfall could plunge further and the overall weak economy shows little but symptoms of a bullish oil run.

According to Capital Economics, Brent is expected to fall and reach $85 during the coming year. however the optimistic view forecasts a stronger demand for crude in US in the coming phase.

Stumbling Oil Prices and the slow recovery

11^th August, 2011: A volatile week, is about to exit leaving behind a trail of faltering markets and economy. The toiling recovery spiced up the scenario further. The oil prices last week fluctuated in about $6 range, while the economic news poured in. the future of the American currency – dollar and the euro left several experts speculating, while concerns for the US and EU’s economic growth further gathered momentum.

The week begun with crash in the equity markets, resulting in oil prices tumbling down by $7 per barrel in New York and $10 per barrel in London. The mid week saw an average of 6.3 percent loss. Parallel crude oil in New York reached an all time low of $82.87, lowest in the last eight months. Little repair was witnessed by the end when the prices closed at $86.88, offering some respite.

The US Debt further downgrading, might lead to the dollar plunging deeper and oil getting some hike. Regardless of newer austerity measures being implemented in the US and EU, they both seemingly have reached a crux from where there is little scope for financial stimulation and similar quantitative measures. 

Amidst the turmoil, Saudi Arabia reported an increase in production of oil; however most of it is being used up domestically for the production of electricity, leaving little for global exports. Tehran on the other hand is struggling amidst issues of low production and the fall in revenues, thereby planning to put up a lower quota pledge before a special OPEC meet. 

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