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Strong dollar impedes crudes progress – Weekly recap
Published on March 19, 2010 by oilprices · No CommentsThe rise in the dollar pushed crude oil longs out of the market at the end of the week reinforcing the strength of the resistance level in crude oil near $84 dollars a barrel. WTI posted an inter-week high of $83.16, and then quickly reversed course settling down at $80.83 per barrel down 34 cents for the week.
On Wednesday, the Organization of Petroleum Exporting Countries agreed at a meeting in Vienna to keep output quotas unchanged for a fifth consecutive time. Saudi Arabian Oil Minister Ali al-Naimi said prices were “beautiful” and demand should rise by about 1 million barrels a day in the second half of the year. Earlier in the week, Saudi Arabia said that the Organization of Petroleum Exporting Countries won’t let global oil markets get too tight, “We will never allow the oil market to get to the point where it puts too much pressure on prices,” Saudi Arabia Oil Minister Ali Naimi told journalists here ahead of OPEC’s Wednesday production policy meeting.
Additionally on Wednesday, the Department of Energy released US inventory data that showed that crude inventories were still very robust. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.0 million barrels from the previous week. At 344.0 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 1.7 million barrels last week, and are above the upper limit of the average range.
Total products supplied over the last four-week period has averaged 19.3 million barrels per day, up by 3.5 percent compared to the similar period last year. Over the last four weeks, motor gasoline demand has averaged 8.9 million barrels per day, up by 1.3 percent from the same period last year.
For crude oil to break the upper end of the current $70-$84 trading range, the dollar will need to slip and inventories will need to fall, until this happens, the range will most likely remain in place.