Rising Crude Oil Prices

Rising Crude Oil Prices

July 29, 2016

While some solid moves were witnessed in  at the end of 2013, so far during the year the commodity is under pressure, weighed down by a feeble global demand . Tapering of the  economic stimulus programme and concerns over the growth outlook of emerging countries are influencing prices. In the domestic market, the trend was not so different but a weak currency provided lower-level support. Meanwhile, frigid winter temperature across the US have escalated heating demand for  and lifted prices to multi-year peaks.

Crude oil
Crude oil in  futures started the year at $99 a barrel but dipped to $91.24 by mid-January and is currently trading again near $98. Meanwhile, Brent crude oil prices held above $106 a barrel, with its premium to US WTI crude continuing to narrow with the severe cold climate in the US.

Growth outlook
Turmoil across the emerging markets surpassed the solid fourth quarter economic growth report in the US. The US Federal Reserve’s decision to narrow its monthly bond buying programme had raised concerns over global growth outlook, which swayed oil prices. Even strong economic data and reports of high demand for heating oil across the US, the world’s top energy consumer, have failed to dominate the prices. The US gross domestic product (GDP) expanded to 3.2 per cent in the previous quarter and exports escalated by 11.4 per cent. At the same time, weak economic releases from China attracted fewer demand prospects from the country, weighing down on the prices. Chinese manufacturing data declined in January, the first time in six months and the Purchasing Managers’ Index declined to 49.5, raising questions over the enocomy’s growth prospects.

Uncertainties and demand-supply
During the previous year, political uncertainties in West Asia raised worry over crude oil shipments and had escalated prices. The Organization of the Petroleum Exporting Countries’ output surged in January from a two and a half year low, hit last January, due to partial recovery in Libyan supply and higher supply from key producers Iraq and Iran. Now, developments between Syria and the Organisation for the Prohibition of Chemical Weapons will be vigilantly observed, as geopolitical tensions in oil producing countries always have a strong impact on oil prices. Recently, Syria missed the deadline to hand over all toxic materials to the OPCW, making the situation uncertain.

Read the original article here: http://www.business-standard.com/article/markets/crude-oil-natural-gas-outlook-oil-outlook-bleak-gas-prices-to-be-firm-114020900830_1.html

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