Crude Up as Attention Turns to US Data, Weather
Crude oil futures edged higher in London Wednesday morning as the profit taking that characterized the previous two sessions abated.
Traders said attention is focused on upcoming U.S. inventory data and weather developments in the western Atlantic for signs of potential hurricanes that
could impact Gulf of Mexico oil production.
"The next move for the market will be dependent on developments in the next 24 hours," said a broker at a London tradehouse. "There’s a chance of a deeper correction lower if the data disappoints and the Gulf (of Mexico) misses the worst of the weather but for now the sellers have taken a cautious approach."
At 1138 GMT, the front-month November Brent contract on London’s ICE futures exchange was up 26 cents at $77.88 a barrel.
The front-month November contract on the New York Mercantile Exchange was trading $0.60 higher at $80.13 a barrel.
ICE’s gasoil contract for October delivery was down $0.50 at $695.25 a metric ton, while Nymex RBOB gasoline for October delivery was up 66 points at 204.45 cents a gallon.
While the weather developments will be key, the market’s immediate concern is the Department of Energy inventory data due 1430 GMT.
Analysts surveyed by Dow Jones Newswires expect crude inventories to fall by 1.8 million barrels, gasoline inventories are seen climbing by 0.2 million barrels, distillates are expected to increase by 1.1 million barrels and refinery utilization is expected to fall by 0.6 percentage points.
Behind the expected slide in crude inventories are production losses in the Gulf of Mexico last week, according to Eugen Weinberg, an analyst at Commerzbank in Frankfurt.
But it’s these production losses, as a result of the precautionary evacuations taken by oil companies operating in and around the Gulf of Mexico ahead of the last week’s Tropical Storm 10, that are making the U.S. inventory levels difficult to predict.
Adding to the cloudy picture is the latest Atlantic weather developments.
The National Hurricane Center said Tropical Depression 13, in the Gulf of Mexico east-southeast of Tampico, remains weak but warns that a tropical storm watch may be required later Wednesday. Hurricane Dean forced state operator, Petroleos Mexicanos, to close 2.65 million barrels a day of oil production but this storm is expected to stay around the Mexican Coast and away from oil assets, according to Olivier Jakob, analyst at Petromatrix in Switzerland.
Elsewhere, Tropical Storm Karen, located 1,285 miles east of the Windward Islands, hasn’t strengthened and it’s predicted path isn’t a worry to Gulf of Mexico oil facilities, while an area of low pressure around the Virgin Islands is waning.
"Overall, until new developments start to appear, there is no specific substance for tropical trading on the long side," Jakob said.
For now, the market remains hamstrung in anticipation of further updates on the weather and inventories but, with a still-large fund long position, further profit taking and a slide lower can’t be ruled out.
Technically, WTI looks primed to test $77.20 a barrel support short term as the overbought conditions are unwound said Barclays Capital’s technical analysts.
Source:
http://www.rigzone.com/news/article.asp?a_id=50677
