Oil turns on plethora of global supply interruptions

Global equity markets have responded favorably to a changing of the timeline on an attack on Syria. Equity values have recovered all of last week’s losses with the EMI Index now higher by about 2.5% for the week to date. The year to date loss of the Index is now at 1.6% with seven of the 10 bourses in the Index still in positive territory for the year. Japan remains on top of the leader board while Brazil is still holding down the bottom spot but is off its worst levels of the year. Global equity market have been a positive price driver for the oil complex but offset somewhat by the rising US dollar Index.

There are now two low probability events in the tropics with third one dissipating over the last 24 hours. The closest event has a 20% chance of strengthening to a tropical cyclone over the next 48 hours and is sitting around the Yucatan Peninsula. The other event is in the northeastern Caribbean and has a 30% chance of strengthening. At the moment neither of these events are a threat to U.S. Gulf Coast oil and Nat Gas producing operations. With the tropical activity picking up, it is time to keep the tropics high on the radar list of events that could potentially have an impact on oil and Nat Gas production in the U.S. Gulf and thus prices.

This week's round of oil inventory reports has been delayed by one day due to the holiday this week. The API data is being released on Wednesday afternoon followed by the EIA report hitting the media airwaves on Thursday at 11 am. My projections for this week’s inventory report are summarized in the following table. I am expecting a draw in crude oil inventories with a build in distillate fuel stocks and a small draw in gasoline.

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