Crude Oil Futures Rise Amid Economic Recovery Hopes

Strategic Insights -

Global crude oil futures rose sharply on March 26, 2009, as equity markets reflected hopes for an economic recovery. The International Energy Agency's chief economist cautioned that a strong rebound could lead to an oil shortage. Meanwhile, strong demand and robust oil supplies in the United States have kept prices in check.

Key Takeaways:

  • Crude oil futures rose $1.51, or 2.9%, to $54.28 a barrel on the New York Mercantile Exchange, while May Brent crude traded $1.74 higher at $53.49 a barrel on the ICE Futures exchange.
  • U.S. oil inventories rose by 3.3 million barrels to a 16-year high in the week ending March 20, according to the Energy Information Administration.
  • The global economic downturn has cut demand for oil, leading to a surplus in supplies, with the Organization of Petroleum Exporting Countries (OPEC) reducing output by over 3 million barrels a day since late 2008.
  • Fatih Birol, the IEA's chief economist, warned that once the economy recovers, an oil shortage may surprise markets, saying "it is too early to jump to conclusions. We have yet to see a clear signal from the economy."
  • OPEC members, including the United Arab Emirates, continue to advocate for higher oil prices, with the "fair" price of oil being set at $75 a barrel.
  • Front-month April reformulated gasoline blendstock (RBOB) traded 2.70 cents, or 1.8%, higher at $1.5220 a gallon, while April heating oil traded 2.91 cents, or 2%, higher at $1.4938 a gallon.

Statistics:

  • Crude oil futures rose 2.9% to $54.28 a barrel.
  • Total U.S. oil inventories rose by 3.3 million barrels to a 16-year high in the week ending March 20.
  • OPEC reduced output by over 3 million barrels a day since late 2008.
  • OPEC's fair price of oil is set at $75 a barrel.
  • April reformulated gasoline blendstock (RBOB) traded 1.8% higher at $1.5220 a gallon.
  • April heating oil traded 2% higher at $1.4938 a gallon.

Sources:

  • Dow Jones Commodities News
  • Comtex
  • International Energy Agency
  • Energy Information Administration
  • United Arab Emirates President Sheikh Khalifa bin Zayed al-Nahayan
  • LaSalle Futures
  • Matt Zeman, head of trading at LaSalle Futures in Chicago
  • Dow Jones Newswires
  • Kevin M. Nichols, Dow Jones Newswires