In today’s trade in the Asian session crude oil futures extended losses to an extent and WTI crude dropped below $93/Bbl. Market observers believe that a major reason behind the fall in crude oil price is that investors are concerned about the U.S. Federal Reserve tapering off its bond purchases.
Some analysts also indicate that oil prices are being analyzed for their likely outcome if nuclear talks with Iran are successful. Opening up of Iranian oil for the world will further enhance supply levels and that may lead to a further slide in crude prices. On yesterday, the New York Mercantile Exchange saw decline in light, sweet crude futures for delivery in December.
NYME saw a decline in light, sweet crude futures for delivery in December to a great extent and traded at $92.78 a barrel at 0614 GMT. It was a drop of $0.25 in the Globex electronic session. Following the trend the hand January Brent crude on London’s ICE Futures exchange fell $0.48 to $107.99 a barrel.
Similarly, Nymex WTI crude slipped to a great extent and traded at $93 a barrel. These prices are the lowest since May this year which is indicative of weakness in the U.S. oil market. According to some market observers the lower WTI-Brent spread, which has widened out to levels not seen since March is a troubling trend.
Currently, the Brent-WTI spread is at around $15.25 a barrel. Investors are expecting that oil markets may get some growth in winter as demand for fuel grows and that ultimately helps oil prices. In all estimates, Citigroup says that the oil market for 2014 will see some growth and Brent crude may average $98 a barrel. It sets Nymex to average around $93 a barrel in 2014.
Surge in U.S. Oil Production
If anything that indicates the lower WTI crude prices, it is the fact that it is due to exemplary oil production from the U.S. refineries. In fact, the ongoing U.S. production surge and resulting weakness across the U.S. market, including WTI timespreads has become a major contributor in lowering crude prices.
The Energy Information Administration will be bringing its report today and expected to show that oil inventories in the U.S.+ have gone up amidst West Texas Intermediate trading near a five-month low. Crude stockpiles are projected to gain 1 million barrels in its report.
To contact the reporter of this story: Jonathan Millet at firstname.lastname@example.org