Crude oil extended their losses as bears returned to the market after the International Energy Agency (IEA) warned of more selloffs in the near term as global oil inventories continue to rise. Prices had received a boost on Monday after the release of a monthly report by the Organization of Petroleum Exporting Countries (OPEC), which showed an increased forecast for 2015 with demand for OPEC oil rising to 29.2 million bpd (barrel per day), and a reduction in U.S. supply growth.
“The IEA report is a good reminder that there’s still a lot of supply to come and it doesn’t give much hope for the bulls who say we’ve hit bottom and are now on the way up.” While the supply-demand balance in oil was expected to tighten by end- 2015, the IEA cautioned that “downward market pressures may not have run their course just yet”.
The agency also predicted that demand for OPEC oil will hold at 29.4 million barrels per day this year, and said U.S. shale oil output growth will pause before regaining momentum. The IEA’s outlook was markedly bearish from OPEC’s monthly report on Monday which forecast 2015 demand for oil in the Organization of the Petroleum Exporting Countries will rise to 29.2 million bpd, up 430,000 bpd from an earlier forecast.
Meanwhile, data released earlier showed that inflation in China weakened to the lowest level in five years, underling concerns over a slowdown in the world’s second largest economy. Technically market is under long liquidation as market has witnessed drop in open interest by -3.44% to settled at 20844, now Crudeoil is getting support at 3092 and below same could see a test of 3018 level, And resistance is now likely to be seen at 3262, a move above could see prices testing 3358.
Natural gas prices rallied as forecasts for more cold over the next two weeks boosted heating demand expectations. The National Oceanic and Atmospheric Administration said late Monday that cooler temperatures were expected to make their way into the southeast U.S. and with snow and freezing rain possible in the Northeast. The U.S. Northeast is a key gas-heating area. Bullish speculators are betting on the cold weather boosting winter demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.
Despite recent gains, natural gas prices are likely to remain vulnerable amid speculation supplies are more than ample to meet demand. Total U.S. natural gas storage stood at 2.428 trillion cubic feet as of last week, 24% above year-ago levels and just 1.2% below the five-year average for this time of year. Last spring, supplies were more than 50% below the five-year average, indicating producers have almost completely made up for last winter’s unusually strong demand. Prices are down almost 44% since mid-November as an unusually mild start to winter limited demand while production soared.
Last spring, supplies were more than 50% below the five-year average, indicating producers have almost completely made up for last winter’s unusually strong demand. Technically market is under short covering as market has witnessed drop in open interest by -17.01% to settled at 10532 while prices up 9.4 rupee, now Naturalgas is getting support at 164.5 and below same could see a test of 158.4 level, And resistance is now likely to be seen at 174.2, a move above could see prices testing 177.8