NewsCrude declines as hurricane fears slimPreviousForecastAnalysisCrude today softened towards $78 per barrel as fears eased regarding tropical storm Alex as it moved away from production areas, where it is expected to miss the majority of the oil rigs in the Gulf of Mexico leaving crude supplies unharmed. The eased fears alongside the renewed fears over the outlook for the global economy and growth all pressured crude lower.
Crude was moving south from opening levels today $78 where it recorded its highest around $78.32 and lowest so far around $76.90 per barrel, while currently still trading below $77.00 per barrel. Yesterday the black gold traded around $79 recording its highest around $79.38 and lowest around $78.58 per barrel.
The U.S National Hurricane Center in Miami Florida has stated that Alex is expected to be on track on its way to reach the Mexican – US border by Wednesday, and though still the alarm level is raised over the tropical storm might turn into hurricane it is moving away from major production areas and also off the spill area.
This eased alarm of damage trimmed crude’s gains, despite the evacuation from rigs and platforms in the gulf oil companies. The sentiment is already bearish in the market with fears over the outlook for the recovery and global growth which offset the remaining jitters over Alex driving crude south.
The S&P GSCI Index closed yesterday around 508.37 recording a drop by 3.49 points; whereas the RJ/CRB Commodity Index closed around 263.53 losing 2.08 points.
Moreover, losses endured by London’s energy giant BP continue to mounting as the shares linger at their lowest in 14 years, where the company has lost more than $100 billion in market value since the explosion mid-April. This escalating crisis pushed the New York Federal Reserve to monitor the market closely and especially companies tied to BP on fears of renewed pressure in financial markets, and in hopes to avoid systemic risk if needed.
BP said that the costs for clearing up and capping of the Gulf of Mexico spill have rallied to $2.65 billion up from $2.35 billion as of Friday. According to the SEC filing the costs escalating an estimated $100 million a day over the weekend as engineers anticipated Tropical Storm Alex, where though it is expected to miss the oil spill area it still could generate heavy winds and waves disturbing the operations to contain the leak.
As for NYMEX as of 03:00 EST; motor gasoline is trading around $210.710 per gallon falling by $1.43; heating is trading around $206.490 per gallon also falling by $1.36; whereas natural gasoline is also trading around $4.715 per 1000 cubic feet dropping by $0.38. In London, Brent futures slid by $1.34 to record $76.550.