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Thursday, September 10, 2009

Crude Oil Rises Following Improved Demand Forecasts in Europe

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As widely anticipated, last night OPEC announced that they would maintain production targets, although both economists and analysts will reflect upon a number issue raised following the meeting.


Many OPEC members expressed concern over the weak dollar as the oil-producing states are eager for an increased return on average oil prices if they are to invest in new output.


Also OPEC members were ‘not encouraged’ by non member Russia’s lack of support after last years snub, with Russia increasing output when OPEC invited non-members to cut production. The meeting in Vienna this week broke from recent trends keeping the meeting between OPEC members only.


Elsewhere the demand picture threatens to improve, with several economic reports indicating a recovery in western consumption. In Paris, the International Energy Agency (IEA) are forecasting a better-than-expected end to 2009 and growing consumption in 2010. According to IEA demand for crude oil would reach 84.4 million barrels per day (mbpd) this year. 


Meanwhile American economists have released a number of reports that support the emerging US recovery story, a weekly jobless claims report from the US Labor Department shows claims fell by 26,000 to 550,000 last week.

Economists believe that the report indicates a bottoming out of the US unemployment rate. Additionally the Federal Reserves ‘Beige Book’ surveyed businesses throughout the United States, and according the Fed, the survey provides evidence that the US recession is ending and their domestic economy is growing again.


With economists gaining confidence, oil analysts and traders will look to today’s inventory data from the US Department of Energy. Crude Oil futures are currently trading up 1.25% with WTI (West Texas Intermediary) around the $72 level.

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