MAJOR HIGHLIGHTS As per Ali al-Naimi, the oil minister of Saudi Arabia, OPEC’s largest exporter and its de facto leader, $75 a barrel oil represents a “fair price” needed to support investment in new fields.
OPEC next meets in Oran, Algeria, on Dec. 17 to decide on future output cuts.
Producers such as Royal Dutch Shell Plc are cutting back plans to develop deposits like Canadian oil sands. Shell indefinitely postponed the second-phase expansion of its Athabasca project because of rising construction costs.
MARKET RECAP NYMEX Jan Crude Oil Futures rose by almost 8.7% ($4.67) last week to close higher. Prices had previous breached the $50 psychological mark to make a low of $48.25. Ministers from the Organization of Petroleum Exporting Countries postponed debate on a second cut in output in as many months during meetings in Cairo Nov. 29. They will wait until later this month, after a slump in global economies and the popping of the commodities bubble sent oil down almost $100 from its record price in July to as low as $48.25 a barrel in New York on Nov. 21.
Last week, U.S. crude-oil supplies rose for a ninth week, the longest stretch since April 2005, the Energy Department said Nov. 26. U.S. fuel demand declined the most in 27 years in the first 10 months of this year, the American Petroleum Institute reported Nov. 18.
OUTLOOK The world’s three biggest economies, the U.S., Japan and Germany, are in or close to recession with these countries representing about one-third of global demand in 2007. The main determinant of future price direction will be how the global economy performs and if the economy continues to slow, this will put downward pressure on demand and also have an impact on prices.
At the same time, international oil companies, concerned falling crude may make new exploration projects unprofitable, are curtailing investment plans and slowing projects. That may affect supply when demand does recover. Prices are coming down because demand is also coming down with the market reacting very closely to the global economic crisis.
As Crude prices have fallen by almost 67% from its high of $148 levels, prices are finding support at lower levels. The overall trend still continues to remain down as prices are still closing below its short-term 10-Day Moving Average. We can witness some sideways consolidation in crude prices in this week with crucial resistance seen at $58.80/$62 level & support at $51/$48 levels.
Natural Gas prices are likely to trade sideways as prices appear to be in a consolidation mode. With winter season in US is going on, downside in gas prices can be limited. MCX Dec contract has support at 314 levels & resistance at 340 levels.
Courtesy: Angel Commodities
