Energy Commodities Price Watch: WTI Price Keeps Falling

on Jun 12, 2013

West Texas Intermediate (WTI) has declined for a third day today, June 12, with evidence of rising US crude stockpiles dragging the oil price down. Brent crude has been steady near $103 a barrel supported by a rally in global stock markets and despite a gloomy report by the International Energy Agency (IEA) pointing to constrained oil demand worldwide. The natural gas price has declined on speculation of bigger-than-average rise in inventories.

**WTI Price Drops**
The WTI price fluctuated, with futures for July delivery trading two cents lower at $95.36 a barrel as of 12:12 BST on the NYMEX, after shedding 92 cents to $94.46 earlier. Data from the American Petroleum Institute has shown that US oil stockpiles increased by nine million barrels last week.
Reuters quoted Natalie Rampono, commodity strategist at ANZ, as commenting that US inventories were “still relatively high, well above five-year averages anyway, for this time of year”. Stockpiles in the US usually start dropping in June with the summer driving season boosting fuel demand.

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**Brent Price Supported by Rally in Stocks**
Brent for July settlement has gained 25 cents to trade at $103.21 per barrel on the ICE Futures Europe Exchange today. The European benchmark has benefitted from a rally in the global stock markets which helped offset the impact of the rise in US oil inventories.
The oil price, however, has been under pressure from a report by the International Energy Agency (IEA) suggesting that modest economic growth will limit oil demand worldwide and that this year some developed economies will see absolute declines in oil consumption.

“The IEA report seems fairly bearish overall,” commented Carsten Fritsch, senior oil analyst at Commerzbank, as quoted by Reuters. “It will do little to end the gloomy picture. OPEC production is rising and running above its target, while demand for its oil is falling.” The Organisation of the Petroleum
Exporting Countries (OPEC) cut its forecast for global oil demand growth earlier this week.

“Gloomier overall sentiment is weighing on prices,” Bloomberg quoted Eugen Weinberg, head of commodities research at Commerzbank, as saying. “There was not much positive for the market in today’s IEA report. The supply risks, however, should further support the prices.”
**Natural Gas Price Remains under Pressure**
!m[Brent Crude Price Steadies around $103](/uploads/story/3012/thumbs/pic1_inline.jpg)

The natural gas price has declined for a third straight, with futures for July delivery shedding 0.4 percent to $3.71 per million British thermal units on the NYMEX and trading at $3.717 as of 11:00 SGT. The contract settled at $3.724 yesterday, its lowest closing price since March 13.
The downtrend in the natural gas price was prompted by speculation of rising US inventories and forecasts of mild temperatures in the US northeast. “We’re starting to get some bigger storage numbers and that doesn’t bode well for higher prices in the future,” Bloomberg quoted Bob Yawger, director of the futures division at Mizuho Securities USA Inc, as saying. “The market is continuing to work its way south and there’s no reason to believe it will find support here.”


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