By FXEmpire.com
Outlook and Recommendation
Crude Oil is ended the month at 104.22, in the days since crude climbed to over the 106 price and then fell to trade currently at 102.80 and it continues to fall.
For the first time since 1949, the United States emerged as a ‘net exporter of petroleum products’ in 2011, with Gulf Coast refineries stepping up exports of diesel and gasoline to Latin America. While high prices and a still slow economy have likely curbed demand this year, rising vehicle fuel efficiency standards & ‘light-weighting’, a shift from naphtha & gas oil to ‘ethane from shale’ by petrochemical producers and stepped-up use of natural gas in manufacturing will limit medium-term oil demand growth. The recent pick-up in U.S. motor vehicle sales likely reflects consumer interest in smaller conventional cars with greater fuel economy (approaching 40 mpg) as well as replacement of record-old vehicles. New vehicles sold in March were 20% or 4.9 mpg more fuel efficient than those sold five years ago. U.S. liquids demand may have peaked in 2005.
In contrast, petroleum consumption in China advanced by 6.3% in 2011, after a 12% gain in 2010. While implied consumption has slowed in recent months, China’s crude imports climbed 11.4% yr/yr in March. Vehicle ownership at only 58 per 1,000 people in China — compared with 766 in the United States — points to solid growth in China’s gasoline demand medium-term
After strengthening in March, international oil prices have eased back in mid-April, with Brent trading at US$118/119. Talks on April 14th between Iran and the five permanent members of the U.N. Security Council and Germany, seeking to curb Iran’s uranium enrichment and nuclear weapons ambitions, were inconclusive. However, an agreement to meet again in May appears to have eased concern over near-term ‘geopolitical supply risks’. Saudi Arabia’s Oil Minister is also trying to talk down global oil prices, concerned over the impact of high prices on a still fragile world economy. The Kingdom has stepped up production to 10 mb/d (84% of maximum capability), with overall OPEC production now exceeding the ‘call’ for OPEC crude. However, with a looming EU embargo on Iran this summer (July) and Saudi Arabia’s excess production capability no more than 2 mb/d, we expect oil prices to remain historically high in 2012
Crude Oil Inventory (EIA)
Wednesday’s EIA inventory report which showed, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.8 million barrels from the previous week. At 375.9 million barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year. Total commercial petroleum inventories increased by 1.9 million barrels last week.
Also today a report showed that OPEC’s crude-oil output continued rising in April, as Iraq offset Iran’s production decline. Crude production from the 12 members of the Organization of Petroleum Exporting Countries was up by 115,000 barrels a day from March. With reduced consumption, we should begin to see a worldwide glut of oil. Expect to see oil trading under the 100.00 price by the end of summer.
April Major Economic Events
- This Week in Petroleum
Release Schedule: - Gasoline and Diesel Fuel Update
Release Schedule: - Weekly Petroleum Status Report
Release Schedule: - Heating Oil & Propane Update (-)
Heating Oil, Propane Residential and Wholesale Price Data
Release Schedule: - Weekly Coal Production
Release Schedule: - Weekly NYMEX Coal Futures
Release Schedule: - Coal News & Markets
Release Schedule: - Natural Gas Weekly Update
Release Schedule: - Weekly Natural Gas Storage Report
Release Schedule:
Click here a current Crude Oil Chart.
Originally posted here
