Crude Oil : Closes modestly lower

18 June 2008 10:51:45



Oil prices closed modestly lower yesterday, as easing supply concerns and lower demand forecasts influenced the sentiments of traders.



Crude oil July in NYMEX settled at $133.55 yesterday, after trading in the range $135.23 - $132.00.



Expectations that Saudi Arabia, the world’s biggest oil exporter, is considering increasing its output next month have slightly eased the concerns regarding supply of oil.



Oil prices had touched a new all-time high near $140 a barrel on Monday, on reports that a fire forced Norwegian oil company StatoilHydro to halt oil production at a North Sea platform.



The oil cartel OPEC in its latest monthly oil market report released on Friday cut its estimate for 2008 global oil demand to an increase of 1.1 million barrels a day, from an increase of 1.17 million barrels projected earlier. The total global oil consumption was revised to 86.88 million barrels a day from the previous estimate of 86.95 million barrels a day.



Earlier, the International Energy Agency lowered its forecast for average global oil product demand in 2008 to 86.8 million barrels a day, down 80,000 barrels a day from its previous estimate.



According to the latest energy-outlook report from the US Energy Information Administration, global oil consumption was up a lower than expected 630,000 barrels per day during the first quarter of 2008 compared with year-ago levels, against the expected growth by 1 million barrels a day.



But the US Energy Department’s weekly inventory report last week had revealed that the nation's crude supplies dropped 4.6 million barrels to 302.2 million barrels for the week ended June 6, taking the total fall in crude inventories to 23.6 million in four weeks.



Potential supply threats due to geo-political tensions and the Atlantic hurricane season and OPEC’s unwillingness to increase output despite high prices continue to underpin oil prices.



The Atlantic hurricane season officially began on June 1st. Arthur, the first Atlantic storm of the season, made landfall on Sunday near Mexico forcing the closure of two export terminals, but afterwards weakened to a tropical depression creating heavy rains in the Gulf of Mexico.



Repeated attacks on Nigerian oil facilities sustain concerns on supply from the oil–rich Niger Delta.



Meanwhile, Iran has cut its crude oil exports by 200,000 barrels a day since February 20 due to a seasonal fall in demand for crude oil during the refinery maintenance period. Iran is the world's fourth biggest oil exporter, currently producing around 4 million barrels a day, of which roughly 2.5 million barrels a day is exported.



DWTI (July) traded in the range $135.97 - $132.80 and closed at $134.53 ($135.34).



Weekly Outlook (NYMEX Crude oil July)

Resistances are $137, $138.14 and $139.14; supports $134, $132.35, $131.30. Expecting more weakness below $132.35.



TECHNICAL OUTLOOK (Intra-day)

DGCXCrude (July) - Bullish above 134.75; bearish below 134.20


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