Up or Down for the Crude Oil Market?

Up or Down for the Crude Oil Market?

Oil prices rose 1.4% on Friday following positive business sentiment data from Germany, strikes in France and a storm threat. Elsewhere, the dollar index was all over the place and G20 finance ministers met in South Korea to discuss policy.

Investors were very wary with the Group of 20 meeting underway as it looked unlikely that the ministers could reach a deal on an American-led initiative that looked for emerging economies to let their currencies appreciate.

Investors are also hesitant as they wait for the Fed to announce their decision on a second round of quantitative easing at its policy meeting in November.

China's decision to increase interest rates last week is perhaps a suggestion that the world's second-largest consumer of oil would tighten policy to prevent their economy from overheating. This had rather bearish implications in the commodities markets. However, on reflection, the increased rate may be supportive for prices as Chinese officials seek to place their economy on track for ongoing expansion.

Crude Oil Spread Betting

The weekly report from the Federal Energy Information Administration showed on Wednesday that US crude oil inventories increased last week with imports rising. Domestic crude oil stocks rose to 361.2 million barrels, an increase of 667,000 barrels, in the week to October 15 compared with the week before. The data showed that crude imports gained 472,000 bpd to 8.57 million bpd.

According to a PipTrade report, “Analysts had expected, on average, oil stocks to rise by approximately 1.9 million barrels. Stocks of distillate fell 2.16 million barrels to 170.06 million, with analysts only predicting a 800,000 barrel draw. Gasoline stocks increased by 1.16 million barrels to 219.33 million barrels, going against the expectations for a 1.3 million barrel draw”.

Secretary General of OPEC Abdullah al-Badri said that oil prices of $75-$85 a barrel wouldn’t hold back the global economy, despite some members having called for higher prices to compensate for the weaker US dollar. Badri also claimed that the drop in the value of the US currency was a concern for the Organisation of the Petroleum Exporting Countries, as it has eroded the value of oil income.

OPEC's decision not to change output from the levels agreed in December 2008 still leaves the group a lot of leeway to adjust oil supplies informally. Badri said OPEC needed to remain dedicated to the output curb agreed in 2008, of 4.2 million bpd, if it wanted to reduce the amount of oil held in storage.

Crude Oil Market Spread Betting - Commodities Comparison


Gold Daily - Spread Size	4	5	5	4	5	4	4	7
Gold Daily - Min Stake	£1	$0.60	£1	£0.1	£1	£1	£1	£1
Gold Futures - Spread Size	6	8	6	6	7	6	6	14
Gold Futures - Min Stake	£1	$0.60	£1	£0.1	£1	£1	£1	£1
Brent Crude Oil Futures - Spread Size	4	6	6	6	5	4	4	12
Brent Crude Oil Futures - Min Stake	£1	$2	£1	£0.5	£1	£1	£1	£1
US Crude Oil Futures - Spread Size	4	6	6	6	5	4	4	12
US Crude Oil Futures - Min Stake	£1	$2	£1	£0.5	£1	£1	£1	£1

Comparison Notes.

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