WTI Crude Going Below $96, Brent Crude Remains Above $104

For the first time in 4 days on Monday WTI crude futures traded lower, giving back some of its recent gains. WTI for July delivery lost 0,5% on the day and traded at $95.78 during the European morning session. New York-traded oil prices lost 0,6% earlier in the day and hit a session low. Given the fact the U.S. is the worlds biggest oil consumer and following the positive sentiment about the U.S. economy based on last weeks published data, New York-traded oil rose to a one-week high of $96.42 on Friday, May 17. The Leading Indicator Index rose by 0,6% in April, surpassing three times the forecast of an 0,2 increase. The Michigan Consumer Sentiment Index (MCSI) also rose more than the expected reading of 78.0, reaching a value of 83.7. The University of Michigans estimates showed a 76,4 reading for the preceding month.

This weeks statement of Ben Bernanke, chairman of the Federal Reserve, is going to play a big role in oil pricing as investors are looking ahead for news about the FEDs Quantitative Easing program and its possible slowdown. Any hints for continual of the central banks policy would be bullish. Also on Wednesday at 15:30 GMT scheduled to be released is the Weekly Petroleum Status Report, which reveals data of the crude oil inventories in the U.S.

Brent oil kept above $104 a barrel despite weaker outlook for demand and sufficient supply. It is supported by a bit weaker dollar, which retreated today 0,2% from its highest since July 2010 against a basket of currencies. Oil price is also kept strong by the healthy equity market, which rose to five-year highs, supported by a positive outlook for global growth. Olivier Jakob, analyst at Swiss energy consultancy Petromatrix, said for Reuters: “The strength of the dollar has been negative for commodities, so a slight easing in the currency is positive. But short-term the market looks fairly balanced, with Brent trading in a range between $90 and $110 per barrel. It is difficult to see it breaking out of that for a while.”

Oil prices found some support from tension in the Middle East, which brought attention on the security of fuel supply. Nevertheless the IEAs long-term forecast is for an 8% increase in global demand for the period between 2012 and 2017, while supplies outside OPEC are expected to rise 10%, which forms a bearish trend.