It’s apparent that the weakening US Dollar and western inflationary fears have extended their influence across the broader commodity markets. Crude oil investors have been the most recent benefactor of the persistently devalued US Dollar. In face of the highest crude and distillate stockpiles since the early nineteen eighties, the oil market has still continued to gain strength over recent sessions.
This morning on London’s Intercontinental Exchange (ICE) West Texas Intermediary (WTI) futures extended its recent run to gain a further 1½% this morning, futures are currently changing hands around $74.30.
Monday’s oil market was buoyed as equities rallied following a series of positive trading updates in America. Monday saw the second consecutive ‘up day’ as crude oil futures exceeded the $73 mark.
The US supply picture has dominated recent themes in the oil market. On the one hand, Crude inventories unexpectedly fell almost 1m barrels last week, however gasoline distillates rose three times more than anticipated.
On the face of it, many investors will still be left to ponder the ongoing US supply picture.
Investors who have been following the supply data will now assess the relative strength of the American consumption outlook. Against a backdrop of high unemployment and a weakening dollar, many commentators believe the outlook for the oil market remains clouded.
The week ahead sees the American Q3 reporting season step up a gear with several major corporation’s scheduled to release their interim results. The next few trading sessions may provide more clarity and decisiveness to an Oil market which has been stubbornly stuck in range for the past couple of months.
Major multinational companies such as JP Morgan (NYSE: JPEL), Goldman Sachs (NYSE: GSDO), General Electric (NYSE: GE) and Southwest Airlines (NYSE: LUV) all report this week. The new data and forthcoming projections will help Investors gauge the overall perception of America’s recovery and any resulting movement in equity markets will also provide stimulus to a range bound crude oil.
On the London Stock Exchange, Oil and Gas stocks have been particularly mixed, BG Group (LSE: BG.) rose one and a half percent. Meanwhile among the remaining Oil & Gas equities, British Petroleum (LSE: BP), Royal Dutch Shell (LSE: RDSB), Tullow Oil (LSE: TLW) and Cairn Energy (LSE: CNE) all remain fairly unchanged from Monday’s close.
Among second tier stocks, Dana Petroleum (LSE: DNX) was in the lead with a 2.5% climb. Dragon Oil (LSE: DGO) added less than 1%, while Heritage Oil (LSE: HOIL) was only slightly lower.
Mongolia-focused Petro Matad Ltd (AIM: MATD) led the juniors with an 8% rally. Chinese coal bed methane business Green Dragon Gas (AIM: GDG) followed with a 6% gain. Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) and Kazakhstan operating Max Petroleum (LSE: MXP) both added 3%.
North American based explorer Nighthawk Energy (AIM: HAWK) and Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) went in a different direction, sliding 5% and 3% respectively.