Crude oil remains firm in European session. Apart from improvement in broad market sentiment, US President Barrack Obama's suspension of deepwater drilling and NOAA's forecast for an intense hurricane season probably helped buoy prices. Currently trading at 75.5, the front-month contract for WTI crude oil has soared another +1.27% from yesterday's close.
The White House announced to suspend drilling of 33 deepwater exploratory wells in the Gulf of Mexico for 6 months. According to Wood Mackenzie, tighter drilling regulations could lower oil production from the deep waters of the Gulf by as much as 19% in 2015 and 2016 and threaten the high-cost development of 7 of 13 fields. The threatened fields are estimated to hold 1.8B barrels of oil equivalent and should contribute as much as $7.6B to government revenue. Others warned that the rules impede exploratory drilling, delay the discovery of new fields and shorten the oil reserves life in the US.
The National Oceanic and Atmospheric Administration (NOAA) said that the hurricane season (June 1 to November 30) in the Atlantic in 2010 has an 85% probability of being above normal, with a 70% probability of 14 to 23 named storms.
These developments are going to tighten the oil market in the near-term and the long-term.
Natural gas price jumped despite bigger-than-expected stock-build. Certainly, China's assured confidence in the Eurozone and encouraging economic data booted price higher. The benchmark contract soared +2.31% and settled at 4.29. Today, price grinds higher above 4.3
The US Energy Department reported that gas storage soared +104 bcf to 2269 bcf in the week ended May 21, slightly higher consensus of a +100 bcf increase but narrowed the surplus to the 5- year average to 16.3% from 16.6% in the prior week.
Gold continues hovering below 1220 while other precious metals stabilize after rising strongly yesterday. ETF Securities said platinum price may 'spike' in June as World Cup in South Africa may disrupt electricity supplies to gold mines. The noble metal gained +1.48% and closed at 1552.9 yesterday.