WT Research
All posts from WT Research
WT Research in WhoTrades Research,

Brent breaks 4-day losing streak, gaining near end of week


Oil prices traded lower on Monday, pressured by disappointing data out of China. China's National Bureau of Statistics reported last Saturday that the consumer price index rose 3.2% in February YoY, vs. expectations of a 3.0% rise, while annual industrial production growth in January and February, combined at 9.9%, was the lowest since October 2012. 

Also applying pressure on dollar-denominated oil was a strong dollar after better-than-expected US jobs report as well as ratings agency Fitch's downgrade of Italy's credit rating. 

In addition, Saudi Arabia produced more crude oil in February than it did the previous month, even while lowering the amount supplied to customers, which put pressure on crude futures.

Brent slipped 86 cents to USD 109.99/bbl, after hitting an intraday low of USD 109.53. US crude pared most of the day's losses, trading down four cents at USD 91.91/bbl after having fallen under USD 91.

Losses were limited by political conflicts in the Middle East. Syrian oil production is not considered significant, but investors worry the unrest could spread to major oil exporters in the region.

The ongoing geopolitical tensions over Iran's controversial nuclear program also lent support to crude oil futures. Brent crude prices fell a third straight session in choppy trading on Tuesday, while US oil posted a fourth consecutive gain, tightening the spread between the two contracts to the narrowest since January.

Brent's premium to US crude dropped as low as USD 16.84/bbl, as WTI rallied after running into firm support the previous two sessions at just above USD 90.80.

Brent crude fell 57 cents to settle at USD 109.65/bbl, after reaching USD 111.20, while WTI rose 48 cents to settle at USD 92.54/bbl, having reached USD 93.47.

A trimmed forecast for economic growth in the US and the Eurozone in OPEC's monthly report, along with expectations of rising US oil output, applied pressure to oil prices even as the producer group left its forecast for 2013 global petroleum demand growth steady.

The US Energy Information Administration (EIA) cut its 2013 world oil demand forecast slightly in its monthly report, but also cut the forecast for non-OPEC output.

Also putting pressure on Brent prices was news that South Korea plans from April 1 to close a tax loophole on a rebate for crude imports processed by refineries into fuel for export, which may affect the flow of Europe's North Sea crude to the country.

News that China's implied oil demand rose in February, up 4.9% from the same month in 2012, provided support for crude futures along with the dollar index briefly turning negative.

The US currency has been strengthened by Friday's supportive U.S. February employment data and Italy's credit rating downgrade.

Brent crude prices fell on Wednesday pressured by a larger-than-expected increase in US crude inventories, a trimmed demand forecast from the International Energy Agency and a stronger dollar. While US crude futures seesawed near unchanged, Brent crude fell more than 1% and dropped below its 200-day moving average of USD 109.37/bbl.

US crude stocks rose 2.62 mn bbl last week, the EIA said in its weekly report, slightly more than the forecast for a build of 2.3 mn bbl in a market survey of analysts. Distillate stocks posted a small, unexpected rise, while gasoline inventories fell more than expected, the EIA said.

Brent crude fell USD 1.29 cents to USD 108.36/bbl, down for a fourth straight session. Brent's slide came after it received pressure on Tuesday from news that beginning April 1 South Korea plans to close a tax loophole on a rebate for crude, which may affect the flow of North Sea crude to the country.

The dollar rallied to a seven-month high against a basket of currencies, boosted by stronger-than-expected US retail sales data.

The International Energy Agency (IEA) trimmed its forecast for 2013 global oil demand growth in its monthly report, adding pressure to crude prices.

The IEA also said US crude oil production gains would be enough to protect against most shocks from potential supply interruptions.

The IEA report came after OPEC left its forecast unchanged in reports released earlier last week. OPEC also warned that risks to the US and Eurozone's economic growth could weaken the demand growth expected by the cartel.

Brent crude oil rose toward USD 110/bbl on Thursday, rebounding after four days of losses, after the latest indication of a labor market recovery in the US. Data which showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week also lifted US equities as the DJIA extended its recent winning streak to 10 days in a row.

A subdued outlook for oil demand growth and easing supply concerns, however, limited the gains. Brent crude futures rose 86 cents to trade around USD 109.38/bbl, while WTI rose 25 cents to USD 92.77. Oil's gain was capped by a stronger US dollar, which was near a 7-month high against a basket of currencies on Thursday.

Brent crude rose to near USD 110/bbl on Friday as strong US economic data fuelled prospects of rising demand, while concerns over supply from the Middle East added support.

US industrial production strengthened more than expected in February on a rebound in manufacturing. This report came as a follow-up to strong US jobs data the previous day, which also helped persuade investors that demand for energy would be robust.

Oil prices were boosted on Thursday by President Barack Obama's comments that military force remained an option if sanctions and diplomacy failed to curb Iran's nuclear ambitions.

Brent was up more than USD 1 to USD 110.01/bbl, gaining for a second day after snapping four straight days of losses. US crude futures gained 47 cents to USD 93.50/bbl, and was set to post its second straight week of gains. Oil was also supported by weakness in the US dollar, which made dollar-denominated crude more affordable to holders of other currencies. The dollar fell on Friday on investor concern that recent, strong U.S. economic data could prompt an early retreat from monetary easing by the Fed.

Iran is still more than a year away from developing a nuclear weapon, Obama said in an interview with Israeli television broadcast on Thursday, six days before his visit to Israel.

Obama apparently sent a message to Prime Minister Benjamin Netanyahu on the need for patience with Washington's Iran strategy while also showing US resolve to confront Tehran if necessary. Worries that the standoff between the West and Iran over the Islamic Republic's controversial nuclear program will escalate and disrupt oil supplies have kept Brent above USD 100/bbl through most of 2012 and this year despite weak demand. In other news, US consumer prices registered their biggest increase in nearly four years as the cost of gasoline rose, data released on Friday by the Labor Department showed. According to data compiled by Gasbuddy.com, which tracks average US retail fuel prices, the price of a gallon of gasoline at US pumps has risen more than 40 cents this year to USD 3.67.

However, consumer sentiment tumbled to its lowest since December 2011 in early March, hit by dissatisfaction with government economic policies and as fewer Americans expected to see improvements in growth or the labor market, a survey showed.