Crude Oil gained 33 points ahead of today’s official EIA inventory due in a few hours. WTI is selling at 49.78. Brent Oil remains under $60 but added 74 cents to trade at 59.65. The plunge in oil prices is scaring some members of OPEC. Nigeria’s oil minister told the Financial Times Monday that the crash in crude oil prices could cause the cartel to hold an emergency meeting. OPEC isn’t scheduled to hold a regular meeting again until June. The last time it met, on Thanksgiving Day, a Saudi Arabia-led OPEC announced it would not cut production to offset an oil supply glut from new U.S. supply. Since then, oil prices have plummeted 30%. It’s hurt some oil producing countries more than others.
“There are absolutely no signs that they are going to have an OPEC meeting of substance” anytime soon, said Tom Kloza, chief oil analyst at the Oil Prices Information Service. In other words, even if OPEC held an emergency meeting, the group isn’t likely to shift strategies.
Consider the source: It’s important to remember the emergency meeting talk didn’t come from Saudi Arabia — the real power behind OPEC — or even from influential allies like Kuwait and the United Arab Emirates. They were made by Diezani Alison-Madueke, Nigeria’s oil minister. While she does serve as OPEC’s president and is responsible for coordinating emergency meetings, Alison-Madueke also represents one of the countries being hit hardest by the oil price drop.
Nigeria, the largest oil producer in Africa, needs oil prices of nearly $120 a barrel to balance its budget, according to Deutsche Bank. But late last year the Saudi oil minister was quoted as saying it wouldn’t cut output even if oil plunged to $20 a barrel.
Oil traded near its lowest closing level in almost two weeks before U.S. government data forecast to show crude inventories expanded from a record high. Futures fell as much as 1.6 percent, dropping for a fifth day in the longest declining streak since August. Crude stockpiles probably rose by 3.75 million barrels last week, a Bloomberg News survey showed before an Energy Information Administration report on Wednesday. Supplies have increased the prior six weeks to 425.6 million, the highest in records dating back to August 1982.
Today’s watch: As traders turn their attention to Janet Yellen’s testimony on Tuesday and Wednesday it is hard to forecast the US dollar volatility until she begins her presentation which is not until late in the trading session. The US dollar is continuously rising ahead of the event. Traders can expect Yellen to keep her hawkish attitude while lawmakers press her for some commitment. Also the EU Ministers will not give a final nod to Greece’s reforms until later tonight but markets have turned off on Greece so the euro can be expected to remain in the lower 1.13 price range and the greenback should hold near the 94.70 level over the next trading period. The pound will react to the greenback although it is trading extremely high is will most likely dipped to the bottom of the 1.54 range. The CAD will remain weak and hold at the 1.26 level as crude oil is expected to remain in the red. Natural gas is expected to recover earlier declines as traders booked profits, but weather forecasts continue to show storms and cold. Otherwise commodities will remain quiet until tomorrow when China returns from holidays.
Source-The News