Currently oil futures prices are hovering below $83.50/bbl with loss of more than 1 percent in electronic trading. Most of the Asian stocks have headed for a downside trend in lieu of Bernanke statement given on yesterday. A plunge in global financial market was witnessed after hope of further monetary stimulus became vein as Fed denied for it. Thus, we may expect the impact is to remain for the day by over shadowing China’s interest rate cut for the first time in last four years.
Other sides, third largest oil consuming nation Japan’s current account has been slumped which may further weigh on oil prices. Spain has been downgraded by Fitch Credit rating company by three notches, which may continue to weigh on Euro. Thus, weakening Euro may pressurize oil prices. From economic front, data releases from German in the form of Trade balance is likely to decline along with lower balance of current account. So, Euro is expected to take negative cues out of it, which will have negative impact on oil prices. Likewise, trade deficit of US may fall whereas wholesale inventory may increase. This may give a mix picture for the US economy. However, oil prices are expected to remain weak throughout the day by taking negative cues from the above factors. Today the Algerian Oil Minister called for OPEC to reduce production and wheel in countries that are over producing, to reduce world supply. OPEC will be meeting towards the end of the month.
Currently, gas futures prices are trading at $2.241/mmbtu down by more than 1percent early morning trading. We may expect gas futures prices to remain under pressure throughout the day with unchanged fundamentals which looks little bearish for the gas market. Declining demand from US residential sector is weighing on gas prices basically. As per US Energy department, natural gas storage has been increased by 68 BCF. There is no concern of tropical storm in Gulf areas, thus it may keep prices under pressure.
Beginning of summer season may drive higher demand for Gasoline for summer driving demand which may weigh on the natural gas prices. On the other side, as per National Hurricane Centre, weather condition is expected to remain normal, which may not pull demand from residential sector. The National Weather Forecast calls for a mild spring and summer which is a negative for natural gas, as high temperature demands extra electricity and the producers turn to NG for the extra production.