Crude oil price slips up as fears grow over supply
After witnessing the biggest weekly advance in almost four months following signs of economic growth in the U.S. and China, crude oil dropped on Monday as the inventory data showed weak fuel demand in the United States.
Demand worries were triggered after the world’s largest oil consumer reported on Friday that net crude imports fell to their lowest in a decade while stockpiles rose, suggesting weakness in demand from the United States.
However, markets believe that this outcome may have been the result of a drawdown by refiners who seek to minimize year-end working capital, and that this phenomenon will be reversed in the coming weeks. Crude is trading as of this writing around $92.80 a barrel compared with the opening at $93.18 and with the highest at $93.18 and the lowest at $92.73.
Brent is trading as of this writing around the $111.24 after falling 0.06%. Natural gas is trading around $3.314 per 1,000 cubic feet after rising 0.82%, while heating oil is trading around $3.0201 after rising 0.08% and gasoline is trading around $2.7606 a barrel after falling 0.13%.
Adding to the downside pressures on the energy market this week will be the caution that will rise ahead of the European Central Bank and Bank of England rate decisions and some other key data from the Euro Zone and China. Crude found support last week from the steady hiring in the U.S. and the data that showed expansion in the manufacturing sector in the United States and China, suggesting oil demand may remain well supported.
Investors will monitor this week the developments in the Middle East, where the escalating Syrian conflict prompted the U.S. to send troops to its borders with Turkey, adding to worries of a possible supply disruption from the region, keeping prices higher. After U.S. lawmakers passed last week a bill to undo the fiscal cliff that threatened to push the economy into recession, global markets will be watching now if officials will agree on the nation’s debt ceiling and if the Feds will end the asset purchases this year.
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- Brent slips below $112 on EU contagion worry