|Analysis||Crude oil futures managed to incline throughout yesterday's US session to record levels above $74.00 per barrel, supported by OPEC’s decision to maintain production targets at previous levels. Adding to that, expectations are that the EIA report today will reveal a drop in US stockpiles.|
OPEC decided yesterday to stabilize oil production targets for the fourth time this year in their meeting held in the capital of Angola, Luanda. The decision was inline with markets and analysts’ expectations, the cartel kept overall production quota steady at 24.845 million barrels per day.
Meanwhile, Saudi Oil Minister Ali Naimi, as well as several other ministers, stated that they will maintain production rates at their present status preserving the previous cut of 4.2 million barrels per day. In addition, Iran and Nigeria are presently supplying above their target share.
U.S. reports yesterday showed improvement within the houses sector, where new house sales in November have risen and thus supporting crude prices to gain on signs the recovery is gaining momentum; crude managed to record levels around $74.85 per barrel. Meanwhile, the U.S. will not be able to formally pull out of the economic recession, unless the houses sector bottoms out and starts to recover steadily.
Crude contract for February delivery opened yesterday at $73.42 per barrel and recorded its highest at $74.85 and lowest at $72.70 per barrel, closing at $74.40 per barrel.
However, oil futures lost nearly by 54% throughout 2008, which was labeled the black year for witnessing the worst economic crisis since the great depression, oil futures dropped to record levels around $34 per barrel after recording historical levels around $147 in 2007. Meanwhile, 2009 held hopes of the financial crisis finding its bottom, which supported oil prices to rise by 67%.
As for today, we await the release of the U.S. EIA report, where expectations are for a drop in inventories, especially amid the snow that covered many US states; the report is expected to reveal a drop from last week by record 1.5 million barrels; compared to the drop witnessed the previous week by 3.7 million barrels. The expectations of inventory decline follow that reported by API which also reported a drop in inventories yesterday.
The rise in crude yesterday managed to support energy producers which reflected positively on markets yesterday; Total SA shares rose by 1.73% or 0.76 reaching 44.61 euro; EXXON MOBIL shares fell by 0.04% or 0.09 to close at $50.84; while CHEVRON CORP shares rose by 0.13% or 0.10 at $77.49.
On the other hand, Distillates January Contracts in NYMEX trading remained around $1.95; whereas motor gasoline inclined to record $1.90 a gain of 1.1 cents; while natural gas contracts inclined to record $5.73 for every 1000 cubic feet.
Meanwhile, today February contracts opened at $74.52 per barrel, recording its highest at $74.65 per barrel and lowest at $74.25 per barrel to currently trade around $74.60 per barrel.