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Thursday, May 21, 2015

Crude erases early losses and ends higher

Further decline in U.S. oil storage levels pushes prices up 


Crude-oil futures erased early losses and moved higher on Wednesday, 20 May 2015 at Nymex as markets weighed stronger Chinese manufacturing data and a further decline in U.S. oil storage levels. 

On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at $59.15 a barrel, up $0.17 in the Globex electronic session. 

Oil prices gained after the EIA's data showed that U.S. commercial crude-oil inventories fell by 2.7 million barrels in the week ended 15 May 2015. 

Meanwhile, traders and shipping companies are keeping a close watch on the stand-off between Iranian warships and U.S. and Saudi Arabian naval forces off the coast of Yemen. The United Nations said negotiations for a diplomatic solution to fighting in Yemen will begin May 28 in Geneva. 

The April minutes of the policy-setting FOMC were released shortly after the close of regular metals trading on Comex. Only a “few” Fed officials thought economic data would improve enough to trigger a rate hike at the next meeting in June. The latest FOMC meeting minutes revealed the majority of committee members do not want to raise interest rates in June. The minutes also suggested the Fed will continue to be “data-dependent” and that the price weakness of the first quarter was transitory. Recent U.S. economic data has been a mixed bag and has provided no solid clues on when the FOMC might make an interest-rate hike. 

The feature in the market place so far this week has been the resurgent U.S. dollar index. The index is a basket of six major world currencies weighted against the greenback. Many raw commodity markets, including the precious metals, have been hit hard this week, mainly due to the appreciation of the dollar. 

Reports overnight said there is progress being made in the Greece-EU/IMF debt restructuring talks. The existing bailout deal expires in June. The reports said Greece will run out of cash in June without a new cash infusion from its EU-IMF creditors. Despite the progress reportedly being made, this is a big, messy situation that will continue to cause major problems for the European Union. This is a major underlying bearish factor for the Euro currency. 

The Bank of England's minutes of the latest monetary policy meeting, released Wednesday, showed the BOE reckoned U.K. economic growth will accelerate in the second quarter, following a slow start to the first quarter. 

Among other energy products, Nymex reformulated gasoline blendstock for June, the benchmark gasoline contract fell 0.1% to $2.0389 a gallon, while June diesel traded at $1.9485, 25 points higher. 
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