Oil markets, already jittery from a steep, so far unexplained drop in a frenzied half hour on Monday, were shaken by another fall on Wednesday, albeit less pronounced and not as swift as Monday’s.
CLZ2 92.32, -3.60, -3.75%
Another spill for oil
Wednesday’s drop has been blamed on comments from Saudi officials, and on technical trends that created resistance above $100.
Some analysts also pointed to seasonal patterns, and demand worries.
Oil CLV2 -3.74% on Wednesday ended 3.5% lower at $91.98 a barrel on the New York Mercantile Exchange. That was oil’s lowest settlement in more than six weeks, and one that puts week-to-date losses at more than 5%. Read more on oil futures.
Here’s a rundown of what oil traders, analysts and energy officials are saying about oil’s moves this week:
Fat finger? Nope
The exchange didn’t report any technical glitches on Wednesday, and on Monday had also dismissed concerns about so-called “fat finger” trade.
U.S. Commodity Futures Trading Commission officials have not yet returned requests for comment about the Wednesday decline, but at least an informal probe into Monday’s drop seemed to be underway.
CFTC member Bart Chilton recently said the commission is seeking more information. Chilton told The Wall Street Journal “superfast price moves, like we saw in oil (on Monday), put us on high alert,” he said. Read more on CFTC's Chilton response.
Weak demand, big supplies
Wednesday’s losses were exacerbated by a weekly government report showing a larger-than-expected increase in supplies, and weak underlying fundamentals. Demand for oil has been in decline for some time.
The Energy Information Administration on Wednesday reported an increase of 8.5 million barrels in crude supplies for the week ended Sept. 14, well above expectations for a 2.5 million increase and the American Petroleum Institute’s 2.4 million estimate late Tuesday. Read more on EIA’s report and API’s report .
Oil sold off further after the EIA’s 10:30 a.m. release. But it had already started to tank after Nymex floor trading opened at 9 a.m., making legs down at around 9:15 a.m. ET and 9:50 ET. By the time the EIA supply data came out, it had fallen about 2% from 9 a.m. ET to 10:30 a.m. ET.
A spokesperson for the EIA said there was no indication the report had been leaked ahead of its 10:30 a.m. ET release.
Strategic Petroleum Reserve
After oil dropped $4 in 20 minutes on Monday, analysts cited speculation -- some on Twitter -- that the White House could release oil from the U.S. Strategic Petroleum Reserve. Read more on Monday's oil markets.
Such rumors surfaced again Wednesday, and the White House repeated a general willingness to act. Read more on how a Strategic Petroleum Reserve release would impact oil markets.
White House officials on Wednesday said they were monitoring oil markets and “the president insists that all options for dealing with (the high oil prices) remain on the table, and that includes” a Strategic Petroleum Reserve release.
The Saudi angle
Saudi Arabia was also among the reasons given for Wednesday’s 3.5% drop. The country has offered customers in the U.S., Europe and Asia extra oil supplies to offset rising oil prices, the Financial Times reported, citing a senior Gulf-based oil official as saying the current oil price is too high. Read FT report.
Also Wednesday, OPEC’s secretary-general said there was “no shortage anywhere in the world.” Abdalla El-Badri was speaking in Austria at a minerals resources conference. Read more on El-Badri comments.
“For large oil swings we always first have to look to Saudi Arabia,” said Seth Rabinowitz, who covers commodities as a partner at Silicon Associates. “The sudden downward spiral in oil is due to speculation of Saudi Arabia increasing supply,” he said in response to emailed questions.
Contract expiration
The week has been thin on volumes, amid quiet trading due to a religious holiday on Monday.
To complicate matters further, the front-month October contract expires on at the end of floor trading on Thursday, possibly leading to some liquidation ahead of expiration.
The November oil contract, already the most active, closed down 3.5% at $92.30.
Seasonally, this is also the time of the year many refineries, past the summer driving season frenzy, are focusing on scheduled maintenance, which reduces their demand for crude, said Alan Herbst with Utilis Advisory Group.
At their core, however, oil markets have been largely divorced from supply-and-demand fundamentals, which makes them more vulnerable to sudden swings.
The drop might have been an attempt by a jittery market “to find some equilibrium,” said Jason Schenker, president of Prestige Economics in Austin.
A return to $100 a barrel?
In any given day, particularly in the last two years, oil is more likely to follow currency and equity moves, and only sporadically and briefly move alongside fundamentals.
What made oil’s move more unusual on Wednesday was that it was distinct from other markets. Though losses among energy stocks limited gains, the equities benchmarks closed higher. The S&P 500 SPX +0.12% ended up 1.73 points at 1,461. The dollar was weaker for most of the oil session.
Oil will also react to any whiff of Middle East turmoil, particularly with the simmering tensions between Iran and most Western developed countries and the reverberations of the Arab Spring.
Last week, oil pushed past $100 a barrel intraday, spooking some participants who feel fundamentals cannot justify the high prices. Despite this week’s volume doldrums, prices could quickly return to such levels in the short-term, should more violence occur in the Middle East or tensions with Iran are exacerbated, Utilis’s Herbst said. |
发表于 2012-9-19 18:18
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