Fundamental Analysis for Energy Market

Source:

". . .pace of the global recession in the economy is easing which means that oil demand would rise in the long run"

Oil prices halted their gain as investors locked in profits as they felt prices have gained too much lately despite the upbeat data from major currencies. The American Petroleum Institute (API) released its U.S. crude inventories showing that it fell 1.5 million but this did not affect market as investors focus more on the EIA report released later on today. Yesterday, the contract shed a slight $0.16 closing at $71.42 while recording a high of $71.95 per barrel and a low of $70.16 per barrel.

U.S. stock markets yesterday closed in the green territory as the economy released its pending home sales for June showing that they surpassed market expectations and this is supported the fact that the housing sector is improving, and since this sector was behind the downfall of the nation and as it is enhancing, supports the fact that the pace of the global recession in the economy is easing which means that oil demand would rise in the long run. Looking at oil shares we see that Exxon Mobil fell 0.05 points or 0.07% to 70.60 points, Chevron Corp. gained 0.10 points or 0.14% to 70.41 points while ConocoPhillips dipped 0.14 points or 0.31% to 44.85 points.

Today oil market prices are slightly changed as the attention today is on the EIA report in which expectations show that U.S. oil stockpiles will climb 800,000 barrels while distillate inventories are to incline by 1.2 million barrels. Oil inventories keep inclining, indicating that demand on oil remains week even during the summer driving season in which we usually see that gasoline stockpiles decline as more driving and traveling takes place.

The global recession has weighed heavily on consumer's demand therefore their demand on energy products is fewer, and this discourages investors to stay in black gold markets, which means they step out in fears that prices might fall further in the medium term. The markets today opened at $71.82 while recording a high of $71.87 per barrel and a low of $71.10 per barrel.

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