Oil Improves as US Consumer demand Improves

August 30^th, 2011: Oil prices rose to $87 a barrel in Asia as oil demands in the US improved. Benchmark oil for October delivery witnessed a hike by 22 cents reaching to $87.49 in the electronic trading of the New York Mercantile Exchange. Crude oil settled at a considerable high of $87.27 on Monday 29^th August.

Brent Crude in London for October delivery was also high at $112.30 on the ICE Futures exchange. Three weeks back crude was at $76, 16 percent lower than what it is today. This low price was owing to a widespread apprehension that the EU and the US economies might slip into a period of recession.

He month of July according to Commerce Department, witnessed a sharp rise in consumer spending which accounts to nearly 70% of the economic activity of a nation and this is perhaps the biggest in the last 5 months. Global stock markets too saw increase in spending. For instance the Dow Jones industrial average rose by 2.2 percent, and there were overall gains in most of the Asian stock markets.

With growing economic demands for oil crude oil is expected to head for a low, as apprehended by a few analysts. In Nymex trading, heating oil rose to 0.8 cents and reached to $3.03 a gallon, while gasoline gained 0.6 cents a gallon.

Also in conclusion to the final draft of a major deal between oil giants, most of the big energy companies of the world will have to surrender gas from Iraq’s southern oil fields, to a project led by Shell.

Overall a better week after about three weeks that were full of speculations and worries, with floods in the US and political instability prevailing in Iraq, oil prices last week were dismal, but a sunny morning seems not far.

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. 

For more details check out http://www.ventrumenergy.com.