NewsCrude contracts start the New Year above $80 a barrel PreviousForecastAnalysisCrude contracts rose throughout the Asian session today to trade around $80 per barrel, supported by the positive wave overwhelming financial markets regarding the strengthening recovery in the United States this year, which in role will support demand on oil.
Crude ended 2009 surging by 78%, after recording abysmally low levels in January around 34$ per barrel. The spike in prices was after governments all around the world offered stimulus measures estimated around $12 trillion; targeted at supporting their economies that fell into the worst recession and financial crisis in post war history.
We are awaiting important labor figures this week from the United States which, where unemployment is expected to remain stable in December at 10.0%, after rates dropped in November from 10.2%, where this improvement seen in the jobs market in the US provides more assurances that the official exit for the US, from the worst recession since the World War II, is near.
Since the beginning of the New Year, more expectations for improvement are being witnessed in the global economy, where improvement in demand is expected to overshadow black gold, since it is considered to be a basic material within numerous industries. However, expectations are revolving around crude's stabilization in 2010 between $70 – 80 per barrel; supporting the global economy that remains suffering from weak production levels and requires more time to fully recover from the economic recession.
The cold weather dominating the U.S is considered to be one of the most vital factors that are expected to support oil prices to remain around $80 per barrel. Meanwhile, the U.S Climate Prediction Center stated that the possibility of a drop in temperatures below normal levels throughout the eastern hemisphere of the U.S is expected to start from tomorrow until the January 13; however, it is important to mentioned that the northeastern region consumes four-fifths of heating fuel and therefore supporting demand on oil.
The cold weather in the United States and the optimism in the market were not the only supporters for crude’s upside bias, as jitters are also seen across the market after Russia halted oil supplies to Belarusian refineries after failing to agree to 2010 terms. This sparked fears of renewed tension in the region and a replay of the disruption of supply of the neighboring states like that seen three years ago.
The Russian move is not much affecting the supply in the market yet supporting a bullish bias as Germany and Poland are inspecting the situation closely since the 2007 events between Russia and Minsk did cut supply off some of their major refineries.
Today, we have manufacturing data on the queue from Europe and the US with the ISM December data; expectations of the ISM Manufacturing is to show further improvement; thus, giving impetus to oil prices to ascend. Meanwhile, crude contracts for February delivery opened at $79.70 per barrel, recording its highest contracts at $80.32 per barrel and lowest at $79.65 per barrel; where current trades are around $80.22 per barrel.