Crude Oil prices are generally unchanged this morning on London’s Intercontinental Exchange (ICE), and the West Texas Intermediary (WTI) front month contract continues to trade within a narrow range. The November future was down just over half a percent mid-morning, trading at an intraday low of $66.48.
Crude oil prices remains poised between poor fundamental data, particularly out of America and the potential for re-ignited tensions in the Middle East. Over the weekend the re-emergence of Iran’s nuclear ambitions on the global stage has not provided much support to the oil price as Investors remain focused on America’s consumption.
One of the first reports to shed light on America’s oil and distillate consumption will be released tomorrow. The US Energy Department is expected to announce that crude stockpiles rose by a further 1 million barrels last week. Some US analysts expect the oil price to maintain a broad $10 range between $65 - $75 until a significant change to the fundamental outlook occurs. Crude oil has gained over 50% so far in 2009.
A potential trigger could emerge from the geopolitical situation in the Middle East. With the weekend’s news of Iran’s ‘new’ uranium enrichment facility, the geopolitical influence on the energy complex is back on the table. The tensions between Western leaders and the oil producing state resumed.
Any significant escalation in the region could potentially threaten on-going crude supplies. Shipping through the strategically important Straits of Hormuz off the south coast of Iran carries an average of 17m barrels of crude oil a day, approximately 20% of the world’s daily oil flow. A conflict in the region could close this key oil shipping lane.
However up until now crude oil markets have been generally unaffected with analysts keenly focused on the United States. This week has several key economic reports scheduled which are likely to clarify America’s ongoing recovery and reveal the potential consumption outlook.
The most eagerly anticipated report will be Friday’s monthly Jobless Report from the US Department of Labour. This week’s US economic calendar also includes reports on a variety of indicators including the housing market, manufacturing, consumer confidence and industrial output.
In London major oil and gas stocks did not show much movement in early trade.
Supermajors BP (LSE: BP) and Shell (LSE: RDSB) fell marginally losing over half a percent, other FTSE 100 constituents Cairn Energy (LSE: CNE), Petrofac (LSE: PFC) and Tullow Oil (LSE: TLW) all rose marginally.
Mid tier Oil producers Afren (LSE: AFR) led the FTSE 350 Oil & Gas sector, gaining 4% this morning. Dana Petroleum (LSE: DNX) was also stronger, gaining 29p per share to rise over 2%, but Dragon Oil (LSE: DGO), Heritage Oil (LSE: HOIL) and Addax Petroleum (LSE: ADX) were marginally lower in this morning’s trade.
In the AIM market junior Oil & Gas companies have experienced a mixed session.
European focused Oil & Gas explorers Aurelian Oil & Gas (AIM: AUL) and Ascent Resources (AIM: AST) both gained 3% this morning.
Empyrean Energy (AIM: EME), Dominion Petroleum (AIM: DPL) and Leni Oil & Gas (AIM:LGO) were unchanged in a quiet trading session.
Middle Eastern focused Gulf Keystone (AIM: GKP) has experienced a slightly softer couple of sessions after achieving strong gains last week. Shares in Gulf Keystone slipped 3p per share this morning. Mediterranean Oil & Gas (AIM: MOG) dropped over 6% after it announced its interims results. Similarly South American focused Pan Andean Resources (AIM: PRE) slipped three quarters of a penny despite reporting a 10% increase in revenue.
The recently renamed, diversified energy company SeaEnergy Plc (AIM: SEA) is maintaining its recent trading range despite slipping 3p to trade at 46p per share. Caza Oil & Gas (AIM: CAZA) slipped 2%.