During early Asian session, oil futures prices are trading above $80/bbl with marginal gain of 0.30 in electronic platform. As per National Hurricane Centre, US tropical storm Debby formed on yesterday in Gulf area is slowly dissipating. Currently 50 knots are there, however it’s not expected to strengthen further. Thus, gains in oil prices are getting limited. From, global financial point, the picture is still dull ahead of European summit before the weekend. Most of the Asian equities are trading down, which may keep oil prices under pressure. Fund pool agreement by BRICS nations to support global economy might add some points in oil prices; however partial solution may not help the trend to continue.
Other than this, Italy and Spain are schedule for bond auction tomorrow, which may keep euro under pressure. From economic data, US manufacturing sector is expected to recover slightly, where marginal gain in home sales is also expected. But, overall picture of US manufacturing sector will be down, which may further weigh on oil prices. We may expect oil prices to remain under pressure today.
Currently, gas futures prices are trading above $2.667/mmbtu with gain of more than 1 percent in early morning trading. Today we may expect gas prices to continue the positive trend supported by its intrinsic fundamentals. As per National Hurricane Center, US tropical storm Debby formed on yesterday in Gulf area is slowly dissipating. Currently 50 knots, which may create supply concern to add positive direction in on gas prices. As per US Energy department, natural gas storage has been increased by 62 BCF in the last week, which is lower than last 5 weeks average at this time. On the other side, fall in rig counts is making lower production output. The gas-directed rig count slid this week by 21 to 541, its eighth drop in nine weeks and the lowest since August 1999 when there were 531 gas rigs operating, data from Houston-based oil services firm Baker Hughes showed. Lower production with higher demand of Canadian gas may add points for natural gas prices.
News flow early this week is expected to be centered on the EU Summit and this morning’s surprise announcement from Greece that the Prime Minister and the Finance Minister would not be attending the summits.
“Greece’s Prime Minister Antonis Samaras and Finance Minister Vassilis Rapanos will not attend this week’s European Union summit due to health issues, according to reports out late Sunday. The country will be represented at the meeting by Foreign Minister Dimitris Avramopoulos and acting Finance Minister George Zannias, Agence France-Presse said. Greece is due to present a plan at the summit that includes tax cuts and a request for more time to lower its debt levels, Reuters reported.”
This news should keep markets hoping this morning.
A report released last week showed that the increase in oil production is primarily from 3 sources, Saudi Arabia, which was expected, Iraq, due to their new floating platforms have been able to increase exports and the surprise was the US, who’s production is surging.