Crude oil price recovers Friday after 2 days’ selloff of -8%. Currently trading at 66.35, WTI crude may have the risk of breaking 65 and testing 60 if there’s no supportive news/data in the sector. Oil products also rebound but these are more of technical rebounds. On the contrary, natural gas continues to rise higher after the +10.6% gain over the past 3 days.
While Asian stocks declined in sympathy with US equity markets, stocks in Europe rebound with UK’s FTSE 100 Index climbing +0.56%, Germany’s DAX adding +0.17% and France’s CAC 40 gaining +0.16%. Earlier in Asia, the MSCI Asia Pacific Index dropped -0.7%. In Japan, the Nikkei 225 Stock Average slid -2.6% as Nomura, the biggest securities firm in the country, announced a record $5.6B share offering.
Natural gas storage rose 67 bcf to 3525 bcf in the week ended September 18. The increase was inline with market expectation. However, should supplies rise in similar amount next week, this would bring total storage to a fresh high after a record of 3545 bcf in November 2007.
However, natural gas price has been soaring in the past few days as investors speculate demand will increase as winter approaches. At the same time, the market also concern that the number of rig counts will not be sufficient to meet demand in coming cold weather. We actually do not believe this would be case. Although the number of rigs has fallen more than +50% from a peak of 1606 in September 2008, utilization rate of the remaining rigs has risen. Moreover, weather forecasts show that winter this year will not be as cold as that in previous years.
Gold price rebounds after plummeting to as low as 991.3 Thursday. However, price remains pressured below 1000. Silver extends weakness and is at risk of testing 16 in the near-term. Currently trading at 16.5, the benchmark contract for silver will probably record the first weekly decline after 4 consecutive weekly rises.
Platinum price dropped briefly below 1300 earlier today but then bounced back. Worries about weak auto data in September, together with liquidation of long futures positions, may put price under pressure. Auto consultancy forecast that US sales might have declined to 9.2M units on annualized rate, the level not seen since February 2009, in September after the ‘cash for clunkers’ program. In august, sales jumped +25% mom and +3.9% yoy to 14.09M units as the government’s rebate program spurred demand.
Source: Oil n Gold