Advertisement
U.S. markets closed
  • S&P Futures

    5,304.25
    -4.00 (-0.08%)
     
  • Dow Futures

    40,140.00
    -36.00 (-0.09%)
     
  • Nasdaq Futures

    18,465.00
    -38.75 (-0.21%)
     
  • Russell 2000 Futures

    2,145.20
    +6.80 (+0.32%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Silver

    25.10
    +0.18 (+0.74%)
     
  • EUR/USD

    1.0778
    -0.0015 (-0.14%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • Vix

    13.01
    +0.23 (+1.80%)
     
  • GBP/USD

    1.2623
    +0.0000 (+0.00%)
     
  • USD/JPY

    151.2780
    -0.0940 (-0.06%)
     
  • Bitcoin USD

    70,786.98
    +1,282.25 (+1.84%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,378.22
    +210.15 (+0.52%)
     

Crude Oil Price Analysis for October 2, 2017

Oil prices are near net unchanged Friday, with WTI graining fractionally. A five-and-a-half-month high was logged yesterday before a correction took hold, producing a closing level at 52.23. At prevailing level, WTI oil prices are up 12.5% on the month, though remain down by 3.9% on the year-to-date. The Brent benchmark has seen its biggest Q3 price gain in 13 years. A broad pickup in global demand, along with the OPEC-led supply curtailment, have helped right the imbalance that was dogging crude markets in recent years. A potential supply disruption of Kurdish oil to Turkey has been in the mix this week.

Technicals

Crude oil prices were nearly unchanged consolidating above support near the 10-day moving average at 51.03. Resistance is seen near the May April highs at 53.67. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the black with a downward sloping trajectory which points to consolidation.

cl-092917d
cl-092917d

Petroleum demand which is calculated by evaluating products that are consumed in the United States in conjunction with exports, is surging, led by the rapid rise of distillates. The latest estimate from the Energy Information Administration shows that distillate exports have surged more than 14% on a year over year basis. As we move into the fall into the Northern hemisphere, heating oil and gasoil demand will continue to rise, which could lead the petroleum prices to higher levels.

While active rigs that produce crude oil seem to have leveled out over the past 4-weeks, exports continue to remain robust. The Department of Energy reports that crude oil exports in the first half of 2017 increased by more than 300,000 barrels per day which was a 57% increase. Following the removal of restrictions on exporting U.S. crude oil in December of 2015, crude oil exports have been characterized by greater volatility.

Rig Count Increased

The total oil and gas rig count in the United States now stands at 940 rigs, up 418 rigs from the year prior, with the number of oil rigs in the United States increasing by 6 this week and the number of natural gas rigs decreasing by 1. The oil rig count now stands 325 above the count one year ago. While there is a lag for correlation between oil prices and rig count movement, the recent rise in oil prices will no doubt encourage US shale drillers to turn on the taps at the more profitable pricing. It’s possible that the response to the prices may be quicker than normal.

Some of the improvements in export costs, along with deregulation has led to increased export growth. Prior to the addition of significant propane export capacity U.S. export volume was restricted by limited infrastructure. The improvements such as low tanker rates and additional locks in the Panama Canal have put downward pressure on export costs.

The term structure of heating oil reflects the robust demand distillates. The difference between heating oil delivered at the end of November 2017 compared with heating oil delivered in November 2018, is nearly 7.5 cents per gallon. This $3.1 dollar per barrel different is much greater than the term structure in crude oil. The backwardation in the term structure show how much more traders are willing to pay for distillates today compared to a year from now. Prompt demand makes it unattractive to purchase and store petroleum for some date in the future. This is likely a sign that prices will need to move higher to accommodate the robust demand for distillates.

U.S. personal income rose 0.2% in August

U.S. personal income rose 0.2% in August, with spending up 0.1%. The 0.4% income gain from July was revised down to 0.3% after an unchanged June reading. The 0.3% increase in PCE was not revised though June’s 0.2% was bumped down to 0.1%. Compensation inched up 0.1% versus 0.5% previously. Wages and salaries were flat from 0.5% previously. Disposable income was up 0.1% versus 0.2%. The savings rate was steady at 3.6%. The PCE chain price index edged up 0.2% in August from 0.1%, with the 12-month rate holding at 1.4% year over year . The core rate was also 0.1% higher last month versus 0.1%, with the 12-month slipping to 1.3% year over year from 1.4% year over year .

Canada GDP was flat in July after an unrevised 0.3% gain in June. The lack of change undershot expectations, although the flat reading for July is not a shock as the risk was tilted to the downside with this report. GDP had expanded in the previous eight months. Good producing industries fell 0.5% month over month in July, while the service sector improved 0.2%.

This article was originally posted on FX Empire

More From FXEMPIRE:

Advertisement