nymex crude intraday

DGCX Crude Outlook July 10, 2008
10 July 2008 11:40:26



Oil prices failed to hold on to early-day gains and closed relatively flat, despite escalating tensions in the Middle East with Iran’s test firing of missiles, and a sharp drop in US crude inventories.

Iran test-fired nine missiles on Wednesday, including a new long-range missile capable of striking Israel.

Light, sweet crude oil for August delivery in the New York Mercantile Exchange had traded as high as $138.28, before settling at $135.62 a barrel.

US Crude supplies declined by 5.9 million barrels to 293.9 million for the week ended July 4, according to the latest release by US Energy Department on Wednesday.

The US Energy Information Administration lowered OPEC oil output forecast in 2008 to 32.32 million barrels per day, down 40,000 barrels per day from the agency's prior forecast in June.

The oil market had witnessed one of the deepest single-day falls in the recent times on Tuesday, as profit booking from the higher levels continued amid warning from G8 leaders.

The Group of Eight leaders from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States warned on Tuesday that soaring oil and food prices pose a serious challenge to stable worldwide economic growth.
They also called for diversifying sources of energy and further efforts to improve energy efficiency.
Iran reportedly submitted a response to offers of negotiation on its nuclear program. Iranian Government spokesman Gholam Hossein Elhma said on Sunday that Tehran was ready to negotiate on its programme but indicated it would not halt uranium enrichment.

Crude oil had recorded a fresh all-time high on July 3rd, underpinned by short-term supply concerns due to geo-political tensions in the Middle East and Nigeria and a drop in US crude inventories.

Comments from the OPEC President and a threat from Libya to cut its crude output worsened the supply worries.

Chakib Khelil, president of the Organization of the Petroleum Exporting Countries, said he believes oil prices could rise to between $150 and $170 a barrel this summer.

Libya's most senior oil official Shokri Ghanem said that he was studying the possibility of reducing production in response to a bill before the US Congress that would empower the Justice Department to sue members of the Organization of Petroleum Exporting Countries for limiting oil supplies.

At a meeting of oil producers and consumers, Saudi Arabia said it would raise its daily production by 200,000 barrels in July, in addition to the increase of 300,000 barrels a day which had been announced in May. This would make the total production from the country 9.7 million barrels a day.

But frequent militant attacks on Nigerian oil facilities continue to pose threats to supply from the oil-rich Niger Delta.

The oil cartel OPEC in its latest monthly oil market report had 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 had 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.

Potential supply threats due to geo-political tensions and the Atlantic hurricane season also continue to underpin oil prices.

The Atlantic hurricane season officially began on June 1st. Arthur, the first Atlantic storm of the season had forced the closure of two export terminals in Mexico early in June, before weakening to a tropical depression creating heavy rains in the Gulf of Mexico.

Weekly Outlook (Crude oil NYMEX)

Continuation of uptrend expected above $146. Resistances $149.70, $154.80, $160.00; supports $142.60, $139.80, $132.00.

DWTI (July) traded in the range $138.20 - $135.40 and closed at $136.05 ($136.04).

TECHNICAL OUTLOOK (Intra-day)

DGCX Crude (July) - Bullish above 136.65; bearish below 136.10

MCXARUN