29 Jun. 2012
Despite a lack of details, the surprisingly good outcome from the E.U. Summit was enough to give oil prices a lift, with NYMEX-traded WTI crude trading higher currently at $79.51 per barrel, a gain of 1.82 or 2.34%. Analysts say, however, that that even if the rally continues through the day, oil is still on track to record its worst quarterly result since 2008; prices are down nearly 20% this quarter. Yesterday, oil prices had fallen by nearly 3%, so today’s rally – driven by bargain hunters and short covering according to oil analysts – hasn’t even offset those losses.
Oil prices are getting some support from forecasts which suggest that previously tepid demand will increase in the U.S. as their summer months get well under way, though there is some concern that global growth worries and a weak labor market mean that the U.S. economy’s vulnerability remains intact.
A Norwegian supply cut, the result of an ongoing labor dispute, is also providing a little support to oil prices. Norway’s output has been reduced by 290,000 barrels a day, 50,000 a day more than it was earlier in the week. The impact has been muted to some extent by an excess of supply in North Sea graded-petroleum. JP Morgan’s oil analysts believe that the imbalance will only take about two weeks to reach equilibrium.
On OpenBook, oil traders are overwhelmingly bullish, with 94% buying against 6% selling. A newcomer to OpenBook, trader bluefx from Singapore could be worth following. The trader has a diversified portfolio which includes several currency pairs as well as oil and gold. Of the 103 trades executed since the trader began on OpenBook earlier this week, 98.1% of them have resulted in a profit. The trader has a 4.1% allocation in oil which has resulted in a 11.6% loss, due to a single position that hit its SL, but that and one other loss were the only ones for this trader and since then, two longs in oil returned more than 15% on average. The trader’s overall profit is in excess of 300%.
Markets are also wary of the Iranian sanctions that are due to be implemented shortly. Saudi Arabian officials said that they have reopened a previously closed Iraqi pipeline in order that they can circumvent a potential Iranian blockade.
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