CRUDE OIL PRICE OUTLOOK- Preparations for the Summer

Swings are common in the oil market as today’s analysis shows. Summer season is almost at the footstep and preparations are underway. Is the oil price downward trend temporary and will be offset by the higher demand in the summer season? Media explores this point and a number of other relevant highlights in today’s print:

  • Reuters reports that NYMEX held steady a day after a sharp increase due to higher manufacturing growth in US than expected. This data was anticipated a while ago and was predicted to lower the prices due to falling growth instead.  The key data HSBC final PMI reading for April for China is expected to be released soon and shed insights into the Chinese growth after it fell in March. Also crude oil stocks in US increased by lower than expected levels.
  • However, as volatile as the market is, prices have started to decrease over pessimistic data from China’s Purchasing Managers’ Index. US crude oil stocks are also building and the anticipation is that stocks are being built up by countries in expectation of higher demand in the upcoming summer season. The price decline is temporary and the seasonal effect will soon overweigh it. This is reported by Lananh Nguyen and Ben Sharples of Bloomberg. Oil investors will wait the upcoming data set on inventory from the EIA due on Wednesday May 2nd 2012. Spain has also formally entered into a recession, the second since 2009.
  • Elliott Gue of predicts Brent’s price to be $110 in 2012 and WTI to be more than $100. His in-depth analysis includes a number of important points such as the observation that consumers in US are beginning to accept high prices this is why despite the high oil prices demand went up from the retail and manufacturing side, when compared to last month. Also highlighted are a number of supply disruptions like conflict between Sudan and South Sudan.