Oil Prices Hold Above $72 a Barrel Amid Mixed Sentiment

Strategic Insights -

London's oil markets remained subdued on Thursday, September 17, 2009, as the price of crude oil held above $72 a barrel. Concerns over mounting US product inventories and weak demand continued to weigh on prices, despite stronger equity markets and a weaker dollar against the euro. Market analysts warned that oil price gains would be short-lived, citing the inability of the oil price to find support in the weakness of the dollar.

Key Takeaways:

  • Nymex crude oil futures held above $72 a barrel in London, driven by stronger equity markets and a weaker dollar against the euro.
  • However, gains were capped due to concerns over mounting US product inventories, with distillate stocks at their highest level since 1983.
  • The ICE's gasoil contract for October delivery was up $16.75 at $569.25 a metric ton, while Nymex gasoline for October delivery was down 42 points at 184.41 cents a gallon.
  • PVM Oil Associates highlighted the significance of global distillate stocks, with US stocks 29% higher than last year and inventories in Germany at their highest level in 20 years.
  • Upside remains capped in the short term due to swollen stockpiles and sluggish demand, according to VTB Bank analyst Andrey Kryuchenkov.
  • Petromatrix analyst Olivier Jakob noted that weak product cracks will continue to cap crude flat price, with traders focusing on December put options in expectation of further price declines.

Statistics:

  • The front-month November Brent contract on London's ICE futures exchange was down 18 cents at $71.48 a barrel.
  • The front-month October contract on the New York Mercantile Exchange was trading 14 cents lower at $72.35 a barrel.
  • US distillate stocks have risen by 29% and heating oil by 38% over the past year.
  • German inventory levels have reached their highest in 20 years.
  • The weekly US inventory figures revealed a sharp drop in crude at delivery point Cushing, Oklahoma.

Sources:

  • Dow Jones Commodities News via Comtex
  • Forex.com
  • Reuters
  • PVM Oil Associates
  • VTB Bank
  • Petromatrix
  • Organization of Petroleum Exporting Countries (OPEC)
  • Nigerian government and militant groups in the Niger Delta
  • Energy Information Agency (EIA)
  • Dow Jones Newswires