The International Monetary Fund sees continued sluggish global growth as it reviews its forecasts, Managing Director Christine Lagarde said. The fund will release its new predictions Oct. 8, three months after cutting its global forecasts to 3.1 percent this year and 3.8 percent in 2014. Since then, developed economies such as the U.S. have become growth engines while some of their emerging-market counterparts decelerate. This news seemed to have very little effect on crude oil which remains well above the EIA revised estimates for the balance of 2013. Crude oil ended the day close to the 106 level and is trading at 105.51 in the red by 15 cents this morning. Brent oil is at 108.49 as the spread between the two continues to narrow. Crude oil recovered earlier losses after the US FOMC continued its current monetary policy at this week’s meeting. Crude oil should be trading with a negative bias, as the Syrian chemical weapons issue seems to be resolved and Libya has resolved its strike and protests are ports are slowly reopening and exports beginning to recover. Energy speculators continue to keep the prices elevated which will weigh on the global economic recovery. Traders will closely watch the Chinese PMI release this weekend.
On Wednesday the official EIA inventory showed a decline in stocks which is helping to support prices. Crude oil gained for a second session on Thursday as the Federal Reserve surprised markets by holding on to its monetary stimulus, a move that is expected to underpin demand for oil from the world’s top consumer. Oil prices retreated Thursday after a powerful rally Wednesday fueled by falling US crude supplies and the Federal Reserve’s decision to keep its easy-money flowing. West Texas Intermediate (WTI) for October delivery sank $1.68 to finish at $106.39 a barrel. Brent North Sea crude for delivery in November, slid $1.84 to settle at $108.76 a barrel in London trade. Oil prices for both contracts had gained about $2.50 Wednesday after the US Department of Energy reported a larger-than-expected decline in US crude stockpiles last week, spurring hopes for improved demand in the world’s largest economy.
Natural gas is trading at 3.705 and is flat this morning. Natural gas ended slightly higher on Thursday, with the front-month contract jumping to a two-month high early, following a bullish inventory report, and then paring gains as investors took profits. U.S. natural gas inventories gained 46 billion cubic feet last week, EIA report showed on Thursday. Unexpected maintenance shuts downs on several nuclear reactors have helped the short term demand for natural gas this week.
As summer drive season concluded and winter cold has not yet arrived, gasoline is trading at 2.693 taking cues from crude oil, while heating oil climbed 52 points to trade at 3.0025.
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