Crude oil prices rebounded in volatile Asian trading, but the upturn may only be technical, given forecasts of warmer weather in the US.
Crude oil prices rebounded in volatile Asian trading, but the upturn may only be technical, given forecasts of warmer weather in the US, the world’s biggest consumer, dealers said
At 11.39 am (0339 GMT) here, New York’s main contract, light sweet crude for delivery in January, was up 0.18 usd at 57.52 usd a barrel from its close of 57.34 usd in New York overnight
‘[Yesterday] we saw the fourth consecutive day of decline in prices … but when the market failed to go below 57 usd, we saw some rebound, which is continuing today,’ said Dariusz Kowalczyk, senior investment strategist with CFC Seymour in Hong Kong. ‘It’s not a big deal because oil is volatile.’ Driven by weather, the contract has lost nearly 4 usd in a week after long-range forecasts by the US National Weather Service predicted above-average temperatures in most of the US from January to March.
According to Kowalczyk, these forecasts have led to lower-than-expected use of heating oil, helping push prices down.
‘The weather forecast is not going to be as cold as it was one or two weeks ago,’ he said.
‘All in all, the market in the near term is pulling back a little bit, but that doesn’t mean that we are going to see 50-usd oil or even 55-usd oil anytime soon.’ During the first 15 days of this month, oil prices gained 8 pct, owing largely to a cold snap in the northeastern US, which accounts for some 80 pct of the country’s energy demand, including demand for heating oil.
‘Now that the weather forecast has changed to predict warmer weather, the prices have come down quite significantly,’ Kowalczyk said.
However, CALYON analyst Mike Wittner cautioned: ‘It is still early in the winter.’ He explained: ‘The possibility of a sustained period of colder-than-normal weather will limit any downside.’ Dealers are also looking forward to the release tomorrow of inventory figures from the US Department of Energy.
‘The market expects a decline in the inventories. The data will provide an excuse for a brief rebound in prices. However, the outlook for the year is still on the downside,’ said Kowalczyk.
Source : futures.fxstreet.com