The Organization of Petroleum Exporting Companies meeting slated for Friday of this week is the chief focus as the market continues to trade in the relatively tight range of the past several weeks.
Rhetoric from member countries of the cartel continue touting strong and increasing demand globally in an effort to bolster their position as production undoubtedly will remain high.
Postulations about the price of crude being fairly priced at or around $80 have become the norm from OPEC members with Angola joining the chorus.
While demand does appear to be remaining strong, either through organic economic growth or central bank intervention, the supply side of this equation will more than likely reinsert itself more predominately in the price discovery as the United States consolidates and brings production back to previous higher levels.
The API data from yesterday afternoon could have been signaling the onset of this increased U.S. supply. Though the modest unexpected build in both crude and gasoline was nothing to speak of on its own, if today’s EIA data and Fridays rig count data validate this as the possible start of a new trend in U.S. production, then we could see another run down in prices despite the assertions being made overseas.
The API data, coupled with the strong correction of the dollar, did serve to press the price of crude back firmly in the range that has held for weeks now with the market trading down over a dollar back toward its anchor point of $60.
Natural gas has started to show signs of life to the upside following what has been a very tight three day 5 cent range. With the strong support of 2.60 remaining intact it does seem that a natural test of the psychological 3 dollar level would be in the cards over the coming weeks.
Today’s high of just over 2.72 is a good start, particularly if the market finds its way back to those levels at the close.