Developments in Oil Market 25 June 2013

by Intellitraders ( Website: )

Oil is the cornerstone in global economy. Rise and fall in its price effects global economy in unprecedented ways. When the crude oil was strongly going upwards to $150/barrel a few months back, one of the most advocated topics in media was tapping the alternative sources of energy. At the same time efforts were expended to increase crude output.

The outgoing week had been very happening for this market. The crude futures won late support from investors as they heeded talk of possible scaling back of U.S. stimulus plans. This occurred despite the fact that US dollar gained strength and made oil dearer to hold for foreign currency rivals. The light crude rose by 139 pips to close at $95.64 a barrel, whereas Brent crude stood at $104.47 from $102.42 earlier in that week.

Other developments in the crude oil sector are also bound to affect its prices in the long-term, medium-term and short-term. A recent report suggested that new extracting techniques are likely to increase the crude output from shallower regions of the earth. The report cited that this could add to world’s crude supply for 25 to 30 years to come.

Indonesia is also seeking to increase its dwindling gas and oil output. The country’s oil output fell to 830,000 barrels a day which is roughly half of the level of output back in 1990s. The country’s gas output has also seen diminishing output, falling by about 12 percent since 2010 to 8.2 billion cubic feet a day. This week the country offered 21 oil and gas blocks for exploration in a rights tender. The areas offered are guesstimated to hold up to 3.1 billion barrels of oil and 57.6 trillion cubic feet of gas, according to a source in Indonesian Energy and Mineral Resources Ministry.

In another development on the demand side of crude oil, the Brazilian petroleum regulator the ANP is planning to require holding minimum fuel reserves. The Brazilian authorities have been forced to contemplate seriously on this step to thwart the risk of potential shortages triggered by a faster increase demand then the capacity to produce, store and distribute the petroleum products. The exact amount that will required to be held by refiners is still being studies, it is expected to be set at between 3 to 5days of Brazilian demand.
For derivatives traders’ active in oil commodities, the market is evolving rapidly with immense trading potential in its basket.


Authored by:Intellitraders

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