Observers with keen eyes on the crude oil market believe that though there were some solid moves witnessed in crude oil at the end of 2013, the future looks bleak for the commodity this year. They believe that weighed down by a feeble global demand outlook, the year 2014 may not see crude prices crossing the $100 mark.
Matter of fact is that budget stimulus tapering by the Federal Reserve of the U.S. and concerns over the growth outlook of emerging countries are influencing crude prices. There was a good beginning for crude oil this year when it touched the $99 mark in NYMEX futures; however, it could not keep the momentum and soon fell to $91.24 by mid-January.
On the one hand, WTI is facing trouble, on the other hand, Brent crude oil prices held above $106 a barrel, with its premium to U.S. WTI crude continuing to narrow with the severe cold climate in the U.S. The U.S which has been producing oil in huge quantities the whole year in 2013 is not going to decrease the amount.
Earlier, ForexMinute reported that restrictions on the oil exports in the U.S. may generate further trouble or oil producers. Also, a major reason behind the low WTI crude prices according to market observers is that turmoil across the emerging markets surpassed the solid fourth quarter economic growth report in the U.S.
Also, weak economic releases from China attracted fewer demand prospects from the country. China is facing a huge challenge of maintaining its manufacturing sector which declined in January, the first time in six months. Its Purchasing Managers’ Index also declined to 49.5 which are sending alarms to the policy makers in the country and even global economies.
The last year saw a slight increase in the oil prices when political uncertainties in West Asia raised worry over crude oil shipments; however, now Iran nuke deal with the U.S. has opened Iranian oil market for the world. Similarly, Libyan and Iraqi oil is now available for the global consumers and it is expected to increase production and supply.
In fact, the Organization of the Petroleum Exporting Countries’ output surged in January from a two and a half year low, hit last January. Iraq and Iran are now leading producers of crude in the OPEC group. Syria may also be able to produce oil if the peace talks conclude successfully.
To contact the reporter of this story: Jonathan Millet at email@example.com