After facing a lot of hurdles recently, crude prices are increasing finally in today’s Asian trade. The outcome is also attributed to encouraging U.S. corporate earnings; however, market observers believe that this may be a short stand as they are worried about demand in the world’s top oil-consuming nation would cap any further gain.
In today’s trading, New York’s main contract, WTI or West Texas Intermediate was up 10 cents for delivery in December. Today it closed at $97.21 in comparison to Brent North Sea crude for December which gained eight cents to $107.07. Market observers believe that there are still concerns about weak U.S. demand.
They also believe that the return of a U.S. budget impasse a few months down the road will again have an impact on the crude prices, as the budget impasse is far from being solved for long i.e. it has been postponed for time but not solved yet. Earlier on Thursday trading U.S. oil prices shook off three consecutive sessions of declines and ended up 25 cents higher in New York trading.
A major impetus was given from the data from quarterly earnings from leading U.S. companies like Ford and consumer product manufacturer 3M. If the crude prices are kept in the perspective, WTI has shed more than $3.50 from a week ago which in fact, is the lowest closing level since June 28.
he decline can also be attributed to several factors, one being that the U.S. government’s Department of Energy weekly survey, released on Wednesday reveals that the country’s crude reserves had soared by 5.2 million barrels in the week ending October 18.
According to observers a rise in stockpiles indicate weak demand in the world’s biggest economy.
What If Crude Drops to $80 a Barrel?
Amidst the declining prices of crude, investors are worried about their investments; however, Bryan Sheffield, who is among producers who’ve together invested $150 billion in the Permian since 2010, says that he knows what he’ll do if crude drops to $80 a barrel. He says that he will shut down half his drilling rigs and go on a takeover hunt for weaker rivals.
His strategy may sound good but the bleak future forecast showing that crude is heading down to $70 a barrel next year, may surprise some. However, it will definitely be good for economies like China and India which import a lot of oil and their CAD depends on it.
To contact the reporter of this story: Jonathan Millet at email@example.com