18 April 2008 13:27 [Source: ICIS news]
By Giovanni Coiro
LONDON (ICIS news)--
LONDON (ICIS news)--As profit-taking saw crude oil futures retreat by almost $1/bbl on Friday following a steep climb to new records, the markets looked set for another sharp rise next week, analysts said on Friday.
Most analyst reports during the week pointed to further increases.“We see the upward trend as still intact, and would not rule out a price of $120 within the next few weeks,” said Germany's Commerzbank.
The US inventory weekly statistics on Wednesday was the focus point of the week, leading prices to reach all-time highs on Thursday with NYMEX hitting $115.54/bbl and Brent at $113.38/bbl.
By 11:00 GMT on Friday, May NYMEX crude had fallen, hitting a low of $113.96/bbl, down $0.90/bbl from the last close before recovering to around $114.12/bbl.
At the same time, June Brent crude on ICE Futures was trading around $111.70/bbl, having hit a low of $111.44/bbl, a loss of $0.99/bbl from the previous close.
The Energy Information Administration (EIA) showed an unexpected decrease in oil stocks and a much larger than anticipated draw on gasoline. This was the dominant factor in pushing prices up because most of the oil decline was in the west coast, a region of the ?xml:namespace>
Gasoline stocks dropped 5.5m bbl and crude stocks by 2.3m bbl compared with analyst forecasts of a build in crude stocks of about 1.5m bbl and a draw in gasoline of around 1.8m bbl.
Aside from the usual bullish weekly inventory data, the US dollar, another factor responsible for this continuous surge, helped lift prices this week as it lost ground against the euro and was threatening again to reach record lows on Friday.
Moreover, the low dollar continued to attract funds into oil and other commodities as a hedge against inflation.
This was likely to continue as the dollar could lose further ground on expectations that the
Another rate cut could take place at the next official meeting of the Federal Reserve, the Federal Open Market Committee, scheduled for 29-30 April.
A possible recession could impact oil demand and translate into lower prices. However, for now this seems to be offset by Chinese demand growth which shows no signs of slowing down.
The Paris-based International Energy Agency's monthly oil market report issued earlier in April estimated Chinese demand for 2008 to average 7.89m bbl/day compared with 7.54m bbl/day estimated for 2007.
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