Oil Prices
Posted: Wed May 30, 2012 12:43 pm
The falling Euro is the primary reason crude oil prices are down. Oil trades in U.S. dollars and a strong dollar pushes down oil prices. As I said in my presentation yesterday, the supply/demand fundamentals for oil are good and the oil market will begin to tighten soon. Demand for oil will be up approximately 2 million bbls per day in a couple months. See the OPEC report available on our home page for details. Any improvement in the U.S. home market would be very bullish for oil. - Dan
In the U.S., new and existing home sales rose in April, beating
consensus expectations, with some preliminary data indicating that home prices may
have stabilized. At the same time, consumer sentiment improved more than expected
in May and reached the highest level since October 2007, likely helped by falling
gasoline prices this month. Otherwise, weekly initial jobless claims were unchanged
from the week before and in line with consensus expectations. Adding further support
to the markets, the OECD raised its projection for U.S. GDP growth for this year to
2.4% from 2.0% previously. In Europe though, the Eurozone manufacturing PMI index
declined to 45.0 in May from 45.9 the prior month and the OECD lowered its 2012 GDP
growth forecast for the region to -0.1% from +0.2%. Chinese manufacturing activity
also continued to decline, with the China PMI index posting its seventh consecutive
monthly drop to 48.7 in May from 49.3 in April. However, this drop yielded some
optimism that China would look to support economic growth via additional stimulus.
Meanwhile, despite the positive U.S. economic data and a two-day meeting in Baghdad
with Iran over its nuclear program ending inconclusively, the lingering eurozone debt
crisis continued to yield a headwind for oil prices
In the U.S., new and existing home sales rose in April, beating
consensus expectations, with some preliminary data indicating that home prices may
have stabilized. At the same time, consumer sentiment improved more than expected
in May and reached the highest level since October 2007, likely helped by falling
gasoline prices this month. Otherwise, weekly initial jobless claims were unchanged
from the week before and in line with consensus expectations. Adding further support
to the markets, the OECD raised its projection for U.S. GDP growth for this year to
2.4% from 2.0% previously. In Europe though, the Eurozone manufacturing PMI index
declined to 45.0 in May from 45.9 the prior month and the OECD lowered its 2012 GDP
growth forecast for the region to -0.1% from +0.2%. Chinese manufacturing activity
also continued to decline, with the China PMI index posting its seventh consecutive
monthly drop to 48.7 in May from 49.3 in April. However, this drop yielded some
optimism that China would look to support economic growth via additional stimulus.
Meanwhile, despite the positive U.S. economic data and a two-day meeting in Baghdad
with Iran over its nuclear program ending inconclusively, the lingering eurozone debt
crisis continued to yield a headwind for oil prices