Oil futures continued their positive momentum Tuesday morning, after climbing to a 14-week high Monday on expectations demand for the commodity is set to rise.
Oil futures were recently up 0.3% at $104.70 a barrel. Monday, futures added 1.7% to settle at $104.41 a barrel, the highest close for a most-active contract since March 3, according to FactSet compiled data.
Oil futures are getting a boost from expectations that demand for the commodity is set to improve as many countries continue on the path to economic recovery. Monday's jump in oil futures followed the weekend release of data showing China posted a trade surplus while Japan released a GDP growth figure that surpassed expectations. The European Central Bank's announcement of a stimulus package last Thursday also has been translated as a positive factor for oil demand.
While the recent data support an improvement in demand for oil, oil traders are gearing up for a barrage of reports that will provide more insight into future energy demand. Later Tuesday, the U.S. Energy Information Administration will release its short-term energy outlook. The organization's weekly inventories update will follow Wednesday. With peak demand season under way, analysts are looking for 1.5 million barrel weekly drop in inventories. Close attention will be paid to the amount crude stocks Nymex delivery point Cushing, Oklahoma.
Also Wednesday, the Organization of Petroleum Exporting Countries will meet to discuss oil production and demand. Analyst widely expect OPEC to stand put on oil production, even though demand is expected to improve in the second half of the year. The International Energy Agency forecast OPEC production will average 30.7 million barrels a day through the end of the year.
Late Monday, an official from Saudi Arabia said the country may increase its output in the second half of the year. The amount of crude the Saudi Arabia has to produce to meet demand has become an important metric for oil analysts. The "call on Saudi crude" has sentimentally replaced OPEC output as a measure of oil demand, due to the volatility in output of many OPEC members thanks to recent geopolitical tensions. An increase in Saudi oil output could be interpreted as a very bullish factor for oil demand.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
