In reviewing the EIA weekly petroleum report, the oil imports figure came in at 6.889 (Million Barrels per Day) for the week ending 01/10/14. This number compared to a year ago 8.030 (Million Barrels per Day) puts a nice cap on the downtrend which really started gaining steam in 2010 onward.
It was deja vu all over again for the oil markets yesterday, as both WTI and Brent made small losses within inside-day trading ranges. The incremental information in yesterday’s session basically included pressure from weak oil demand and increasing worries about the upcoming German local elections, while support came from increased speculation about accommodative monetary policies in Japan and China
WTI is showing difficulty in trading above the $94.00/bbl price level, while Brent is doing the same near $113.00/bbl. The oil markets may continue to remain range-bound in the near-term, as influencing factors are somewhat mixed. The upside will focus on improving economic data, buying by managed money accounts, and fresh refinery issues with Motiva
The oil market may remain in a mixed trend in the near-term as it has in the last three sessions, with underlying factors somewhat balanced. Recent support has been given by improved signs of economic growth, COT data, the grounding of Shell’s oil rig in Alaska, and the ramp-up of the expanded Seaway pipeline this week. Environmental groups have already called on the president to suspend drilling permits in the Arctic
Oil prices created an inside-day in WTI yesterday and both Brent and WTI again had trouble with their 50-day moving averages. Those technicals may offer pressure again in today’s trade, where the market will also be weighed down by continued growth in U.S. oil production, growth in oil stocks, building gasoline inventories, and generally weak demand.
Oil prices rallied nicely in yesterday’s trade but once again had trouble getting above the 50-day moving averages in WTI and Brent. Today’s trade could witness a similar disposition, as the general reaction by risk markets yesterday to “bullish” news from the Fed was to finish either lower on the day (as equities did) or significantly below the day’s highs (as energies and precious metals did).
A mid-morning attack by Israel of a Hamas leader yesterday sent the oil market higher, but unless the tensions escalate in the near-term, we would anticipate prices to continue moving lower
This week’s trade in the oil market may witness bottoming action take place, as the U.S. election begins to move to center stage. There may also be an exit from the markets by hedge funds that close their books on Oct 31st, but the impact they actually exert may be somewhat limited in the near-term as their long positioning has already been reduced.
