subject: We Offer Commodity Tips With 100% Accuracy [print this page] NYMEX crude trades in a narrow range above $102 per barrel Thursday after a 1.5% slide yesterday which marked its first decline in three trading sessions. Crude oil trades in a narrow range today as market players await the outcome of Spanish bond sale which will determine direction for currency and equity markets.
Concerns however eased this week after Spains bond auction yielded mixed results. The yields on Spanish bond sale rose as expected however the auction saw good buying interest. Spain sold 3.18 billion euros of bills, compared with a maximum target of 3 billion euros the Treasury set for the sale. The average 12-month yield was 2.623%, compared with 1.418% at the last auction on March 20. However the optimism was short-lived and market players moved to sidelines ahead of bond auctions today. Spain is issuing as much as 2.5 billion euros in two- and 10-year bonds today. In addition to Spain, France will auction 11 billion euros for securities which includes 2017 notes and 2018 inflation-linked debt.
Apart from uncertainty about results of the bond auction, also weighing on euro are recent comments by IMF. The IMF yesterday warned that an escalation of the euro-zone debt crisis could force European banks to sell assets worth up to $3.8 trillion (2.4 trillion) by the end of 2013 and trigger a fresh credit crunch. Uncertainty about Euro-zone economies, mixed US and Chinese economic data has also kept demand concerns high. Supply concerns have taken a backseat at present amid increased production from OPEC however supply concerns persist in some other oil producing nations like South Sudan, Yemen and Syria. Also tensions between Iran and western nations will persist for a long time as Iran will not end its nuclear research.
Mcx liveCRUDE may note some decline tracking cues from international exchange. NYMEX crude trades in a narrow range above $102 per barrel after yesterdays slide. Weighing on crude oil prices is weekly EIA report which noted a bigger than expected increase in US crude oil stocks. Spread between WTI and Brent widened again after weekly report noted another rise in crude stocks at Cushing, the delivery terminal for NYMEX crude futures. Weakness in US equity markets is also weighing on crude oil price. Also weighing on prices is uncertainty about health of major economies. Focus will continue to be US and Euro-zone economy and situation relating to Iran. Data due today includes US jobless claims, existing home sales, leading indicators and Philadelphia Fed index. Apart from it, focus will be on Spains bond sale in US market, Asian equity markets are trading mixed today.
Overall, crude oil updates has eased back after hitting a high of $105/bbl. Price came under pressure after EIA noted a bigger than expected increase in US crude oil stocks. Mixed trend in equity and currency markets has also weighed on crude oil price. Focus will continue to be on US and Euro-zone economy and situation relating to Iran. For US, focus will be on economic data and comments from Fed officials. For Euro-zone, focus will be on economic data and regional bond yields.
WTI crude gained in last few days amid spread trade between WTI and Brent on expectations that Seaway pipeline will be reversed earlier than expected reducing supply overhang in the US Midwest. The premium of ICE Brent crude June contract over NYMEX crude narrowed as low as $14.14/bbl this week, the smallest level seen since Feb. The spread however widened yesterday as EIA weekly report reaffirmed concerns about supply overhang in US. The spread stood at $14.85/bbl at yesterday close and at current price stands at $15.21/bbl.
The spread narrowed this week amid news that Enterprise Product Partners and Enbridge plan to reverse the flow of the Seaway oil pipeline by mid-May, two weeks ahead of schedule. Currently, Seaway brings oil from the Gulf of Mexico to the oil hub of Cushing, Okla., the delivery point for the NYMEX contract. The reversal is expected to ease the glut in the US Midwest.
EIA however noted a bigger than expected decline in product stocks. Gasoline stocks fell by 3.671 mn bbl while distillate stocks fell by 2.908 mn bbl. Demand scenario was also mixed. Crude oil demand, as measured by total product supplied, averaged 18.863 mn bpd last week, down 0.8% from a week earlier. Gasoline and distillate demand rose by 1.1% and 2.1% respectively.
While spread trade is at play, crude oil came under pressure also as US equity markets came under pressure. Choppiness in euro against the US dollar also weighed on price. US DJIA index fell 0.6% yesterday marking its first decline in three days. US equity markets came under pressure amid some disappointing corporate earnings results..
