Crude Prices Hold Above $18.80/Bbl Despite Lack of Fresh News

Strategic Insights -

Crude prices have been exhibiting a bullish tone recently, with the October crude contract on the New York Mercantile Exchange (Nymex) settling up 2 cents at $18.95/bbl. Despite expectations of a build in crude stocks, solid support at $18.80-$18.90/bbl suggests that crude is poised to take another crack at $19. This comes on the heels of a meeting between union officials and state-owned monopoly Petroleo Brasileiro S.A. (Petrobras) on Tuesday, which produced no fresh developments regarding the threat of an oil workers' strike in Brazil. Market reaction to the announcement was muted, although gasoline's recent rally deflated as traders anticipated a build in gasoline inventories.

Key Takeaways:

  • Crude prices are holding above $18.80/bbl, suggesting a bullish tone in the market.
  • The October crude contract on the Nymex settled up 2 cents at $18.95/bbl, despite expectations of a build in crude stocks.
  • Solid support at $18.80-$18.90/bbl is a positive sign that crude is poised to take another crack at $19 (Karen M. Kindt, Enserch Exploration Inc.).
  • Fundamentals such as tight inventories and "lollygagging" in seasonal heating oil production are contributing to the upward trend.
  • The threat of an oil workers' strike in Brazil continues to hover over the market, although a meeting between union officials and Petrobras produced no fresh developments.
  • Gasoline's recent rally deflated as traders anticipated a build in gasoline inventories, with the October gasoline futures falling 0.5 cents to settle at 57.23 cents/gallon.
  • Forecasts suggest that gasoline will maintain its uptrend, citing tight inventory levels and a technical uptrend (Timothy Evans, Pegasus Econometric Group).

Statistics:

  • Crude prices have held above $18.80/bbl for multiple trading sessions.
  • The October crude contract on the Nymex settled up 2 cents at $18.95/bbl.
  • Gasoline inventories are expected to build, with the October gasoline futures falling 0.5 cents to settle at 57.23 cents/gallon.
  • Tight inventories and "lollygagging" in seasonal heating oil production are contributing to the upward trend in crude prices.
  • The Brazilian oil workers' strike is a continued concern for the market, with no time limit to reach a settlement.

Sources:

  • A Dallas-based risk manager at Enserch Exploration Inc.
  • A New York-based trader
  • Timothy Evans, analyst with New York-based Pegasus Econometric Group
  • American Petroleum Institute
  • Department of Energy
  • Petroleo Brasileiro S.A. (Petrobras)