Oil posts modest gains ahead of key data
Thursday, 1 April 2010
LONDON, MARCH 31 (AFP): Crude futures made modest gains Wednesday as traders awaited inventory data from the US Department of Energy and looked ahead to US nonfarm payroll data, due Friday.
"The key statistic of the week will come out on Friday and that is the March nonfarm-payrolls number," said Edward Meir, senior commodity analyst at MF Global. "It will be interesting to see how commodities fare if an in-line or higher number comes in. ... Energy prices will likely spike on a decent [payroll] number, but then perhaps start to weaken later in the day and into next week as the impact of a stronger dollar sets in."
The front-month May contract on the New York Mercantile Exchange was recently trading up 58 cents at $82.95 a barrel, while the front-month May Brent contract on London's ICE futures exchange was 51 cents higher at $81.79 a barrel. The ICE gasoil contract for April delivery was $8.75 higher at $683.25 a metric ton, and Nymex gasoline for April delivery was 41 points lower at $2.2706 cents a gallon.
Positive economic data and a weakening dollar have conspired to help prices stay above $80 a barrel this week, despite a weak demand environment, and the US currency is likely to remain a key factor in oil price swings.
A weaker dollar in recent days has put Nymex light, sweet crude on a path to test the key resistance level of $83.16 a barrel, said Glen Ward of London Capital Group. "Whether this level can keep a lid on the current medium-term rally is the next main direction indicator," he said.
Market participants are looking ahead to the release of US inventory statistics from the Department of Energy later Wednesday, after statistics from the American Petroleum Institute reported a paltry 421,000-barrel increase in crude stocks Tuesday. The industry group also revealed a 946,000-barrel fall in gasoline inventories and a one-million-barrel decline in distillate stocks-both less than analysts' expectations.
Crude inventories are expected to increase by 2.1 million barrels, while gasoline stocks may fall by 1.3 million barrels, according to the average estimate of 17 analysts polled by Dow Jones Newswires. Distillate stockpiles, including diesel and heating oil, are expected to decline by 1.5 million barrels.
Despite crude's recent gains, which have seen prices rise by almost $3 a barrel this week, Mr. Meir remains cautious about the sustainability of these prices, noting that investment funds may be reluctant to increase their positions in view of loose compliance by the Organization of Petroleum Exporting Countries and a possible rise in the group's production in coming months.
"The key statistic of the week will come out on Friday and that is the March nonfarm-payrolls number," said Edward Meir, senior commodity analyst at MF Global. "It will be interesting to see how commodities fare if an in-line or higher number comes in. ... Energy prices will likely spike on a decent [payroll] number, but then perhaps start to weaken later in the day and into next week as the impact of a stronger dollar sets in."
The front-month May contract on the New York Mercantile Exchange was recently trading up 58 cents at $82.95 a barrel, while the front-month May Brent contract on London's ICE futures exchange was 51 cents higher at $81.79 a barrel. The ICE gasoil contract for April delivery was $8.75 higher at $683.25 a metric ton, and Nymex gasoline for April delivery was 41 points lower at $2.2706 cents a gallon.
Positive economic data and a weakening dollar have conspired to help prices stay above $80 a barrel this week, despite a weak demand environment, and the US currency is likely to remain a key factor in oil price swings.
A weaker dollar in recent days has put Nymex light, sweet crude on a path to test the key resistance level of $83.16 a barrel, said Glen Ward of London Capital Group. "Whether this level can keep a lid on the current medium-term rally is the next main direction indicator," he said.
Market participants are looking ahead to the release of US inventory statistics from the Department of Energy later Wednesday, after statistics from the American Petroleum Institute reported a paltry 421,000-barrel increase in crude stocks Tuesday. The industry group also revealed a 946,000-barrel fall in gasoline inventories and a one-million-barrel decline in distillate stocks-both less than analysts' expectations.
Crude inventories are expected to increase by 2.1 million barrels, while gasoline stocks may fall by 1.3 million barrels, according to the average estimate of 17 analysts polled by Dow Jones Newswires. Distillate stockpiles, including diesel and heating oil, are expected to decline by 1.5 million barrels.
Despite crude's recent gains, which have seen prices rise by almost $3 a barrel this week, Mr. Meir remains cautious about the sustainability of these prices, noting that investment funds may be reluctant to increase their positions in view of loose compliance by the Organization of Petroleum Exporting Countries and a possible rise in the group's production in coming months.