Energy Commodities Price Watch: IEA Forecast Weighs on WTI

on Jul 11, 2013
Listen, Thursday, July 11th: West Texas Intermediate (WTI) fell from a 15-month high today after the International Energy Agency (IEA) forecast that global oil supply would surpass demand growth next year. The Brent oil price also gave up gains after touching a three-month peak yesterday. The natural gas price declined with analysts expecting a rise in US stockpiles.

**WTI Price Dragged down by IEA Forecast**
WTI futures for August delivery shed 82 cents or 0.8 percent to trade at $105.91 per barrel as of 12:56 BST. WTI futures dropped after the IEA said that world consumption would climb by 1.2 million barrels a day next year, up from 930,000 a day in 2013, whereas supplies from outside the Organisation of the Petroleum Exporting Countries (OPEC) would jump by 1.3 million barrels a day amid booming output in North America. Bloomberg quoted Harry Tchilingurian, BNP’s head of commodity markets strategy, as noting that the International Energy Agency’s report was “highlighting a bearish bias relative to the supply-demand balance as they introduce for the first time a view for 2014”.

Earlier today, the WTI price had climbed to $107.45 a barrel, the highest since March 27, 2012, after the US Energy Information Administration (EIA) yesterday said that US crude inventories had declined by 9.87 million barrels in the week ended July 5, more than three times the 3.2 million barrels drop forecast by analysts polled by Bloomberg.
**Brent Price Softens**

Brent crude for August delivery fell 57 cents, or 0.5 percent, to trade at $107.94 a barrel on the ICE Futures Europe exchange. Yesterday the European benchmark touched a three-month high of $108.69 a barrel.
The oil price found support in the greenback’s slump following the release of the minutes of the US Federal Reserve’s most recent policy meeting, which indicated that many Fed policymakers wanted more signs of improvement in the US jobs market before scaling back bond purchases.

“Previously there was an anticipation that we would see a tapering of stimulus at the end of the summer, so that spooked traders and we saw that steep drop in June,” commented Carl Larry, president of Oil Outlooks and Opinions LLC, as quoted by Reuters. “Now that we know it’s going to start sometime at the end of the year, it gives the economy some room to grow a little more, and for that unemployment number to get down to around 7 percent, which is going to be good for oil demand growth here.”

**Natural Gas Price Dips**
Natural gas for August delivery has declined today to trade 0.35 percent lower at $3.67 per million British thermal units on the NYMEX as of 10:01 ET. Analysts surveyed by Bloomberg expect an EIA report scheduled to be released later today to show that gas stockpiles have risen 81 billion cubic feet in the week ended July 5.
!m[Brent Price Slips from Three-Month High ](/uploads/story/3904/thumbs/pic1_inline.jpg)
Bloomberg also quoted Matt Rogers, president of the Commodity Weather Group LLC, as forecasting normal temperatures in the US east coast in late July.
“By late next week, that heat ridge is already retreating again, opening the door for rain/cloud risks that could again hamper high temperatures,” Rogers said in a note to clients. Cooler weather in densely populated areas could weigh on the natural gas price by reducing fuel demand from power plants to run air conditioners.