On Wednesday, Brent crude experienced yet another volatile session. The price of the front-month contract surged by more than 2 percent and breached 100 USD per barrel (USD/bbl) level.
Regarding the EIA Weekly Petroleum Status Report, it showed larger than expected draw in crude stockpiles but also higher than expected built in products inventories. The overall message (together with the FOMC minutes) was mildly bearish and the price of Brent is thus seen just shy of 100 USD/bbl today in early trading.
Earlier this week, both the EIA and the OPEC released their monthly reports on the oil market. Both of them suggested that the US/EU sanctions on Iran bite in – in June, oil production in the country fell below 3 million barrels per day. Unlike the official figures submitted by Saudi Arabia to OPEC which showed an increase in oil production in June, the EIA estimates that the production of oil in the country of the key producer slightly fell last month. The situation in the market is, however, rather calm. The EIA estimates that the pace of growth of global oil stockpiles was on average 1.1 million barrels per day in the first half of this year, which could, in our view, create relatively comfortable cushion for seasonally higher demand over the summer.
The minutes from June’s FOMC meeting slightly disappointed some market players and weighed on the price of gold. Today in early trading, gold extends yesterday’s late losses and the price of the yellow metal is seen below 1570 USD/toz, i.e. close to two-week lows.
Chart of the day:
Global ol inventories rose on average by 1.1 million barrels per day in the first half of 2012.