WTI Oil Chart 5 Jan 2011
Daily oil prices have today rebound back above the $90 per barrel price handle following better than expected crude oil inventories which confirmed a draw of -4.2m barrels against a forecast of -1.4m barrels. This data also followed much better than expected employment data in the US suggesting that the US may now be seeing the start of a much firmer economic recovery. Two further factors which will also impact commodity prices include Iran and Kuwait’s determination to maintain OPEC production targets and the emergence of La Nina weather phenomenon, confirmed earlier today by the Australian Bureau of Meteorology. According to the FT it seems the “strength of the present event is inspiring comparisons with 1973-1976, when several years of La Nina conditions triggered severe droughts and pushed the world into the most extreme food crisis since the second world war”. It’s effect on oil production will be seen in disruptions to offshore drilling and production.
From a technical perspective crude oil prices look set to re-test the psychological $100 per barrel price handle which given the stance taken by OPEC and possible weather conditions may be sooner than anticipated.
Kuwait & Iran stand firm on oil production
