Well good news is just around the corner on the supply demand side. API sees a leveling of the supply/demand equation for oil. And this is good news also.
cbs.marketwatch.com
Latest supply data may feed Crude oil bulls
Crude stocks drop 3 million barrels; cocoa and sugar fall
By Myra P. Saefong, CBS MarketWatch
Last Update: 6:57 PM ET May 25, 1999 Agriculture Outlook
New! Futures News
NEW YORK (CBS.MW) -- Crude oil futures may see gains on Wednesday after the industry's inventory report revealed a bigger-than-expected drop in oil supplies in the last week.
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Updated:
5/26/99 9:35:28 AM ET
The report is "a shot in the arm for the bulls," said Phil Flynn, oil analyst at Alaron Trading. The figures were generally bullish and came out better than the market expected, he said. It will "be enough to give the market a bounce tomorrow."
After Tuesday's close, the American Petroleum Institute reported a 3.29 million barrel drop in crude oil supplies in the week ended Tuesday with stocks totaling 332.1 million barrels. Analysts had predicted oil supplies would either rise or fall by about 1 million barrels. Distillate stocks rose a modest 1.1 million to 130.6 million barrels -- on the low-end of forecasts for a 1 million to 3 million barrel rise.
Gasoline inventories rose a modest 771,000 barrels to total 220 million barrels in supplies, compared to analysts expectations of a 1 million- to 3 million-barrel climb.
Demand for gasoline should start picking up as the driving season begins this holiday weekend. Consumption, however, will depend on the weather and prices at the pump, said Flynn.
Ahead of the news on the New York Mercantile Exchange, July crude oil rose 8 cents to $17.14 a barrel and June heating oil rose 0.33 cents to 40.32 cents a gallon. June unleaded gasoline rose 0.60 cents to 49.08 cents a gallon. See commodity headlines.
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Meanwhile, the Iraqi government renewed its oil-for-food deal with the UN early Tuesday. The program will allow Iraq to sell up to $5.26 billion in oil over the next six months in order to buy humanitarian supplies for its people, news wires reported. Iraq has received up to 10 million tons of food through the program since it began in December of 1996. The country exports just over 2 million barrels of oil a day.
"Iraq has agreed to the extension of the memorandum of understanding for another stage," an Iraqi official told Reuters.
Analysts at Pegasus Econometric Group said the first exports under the new deal "may well take place ahead of the earlier June 10 indication," adding to pressure on oil.
Oil indexes saw slight losses Tuesday. The Oil Service Stocks Index fell 0.8 percent to 71.41 and the CBOE Oil Stocks Index lost 0.4 percent to 292.76.
Gold and silver futures mixed
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Gold futures fell as a strike at a mine in Ghana moved closer to an end and on continued concern over the United Kingdom's plans to sell gold reserves in sales which are set to begin with a 25-ton auction on July 6.
On the Commodities Exchange division of the New York Mercantile Exchange, June gold fell $2.10 to $270.80 an ounce.
Workers at Ashanti Goldfields' (ASL: news, msgs) main Obuasi mine in Ghana have outlined a memorandum of understanding, Reuters reported. The deal may end a 12-day strike at the mine, which produces 885,000 ounces of gold a year. "We have had a positive meeting (on Monday) with the labor ministry and all the parties involved," a representative for the company told Reuters.
July silver rose 0.05 cents to $5.06 an ounce. Late Monday, COMEX said silver stocks rose 197,430 to 78,272,349 ounces while gold stocks fell 8,597 ounces to 829,925 ounces.
The Philadelphia Gold and Silver Stock Index fell 2.8 percent to 60.74 with shares of Newmont Mining (NEM: news, msgs) down 4 percent.
June palladium rose $4.95 to $338 an ounce while July platinum fell 10 cents to $359.70 an ounce. July copper rose 0.20 cents to 67.35 cents a pound.
Cocoa and sugar futures turn bitter
Cocoa futures dropped below $900 a ton on Tuesday on large supplies and weak demand for the product. On the Coffee, Sugar and Cocoa Exchange, July cocoa fell $20 to $883 a ton.
On Monday, the minister of planning and development for Africa's Ivory Coast said the government's balance sheet will reflect a decrease in cocoa revenues during the fourth quarter as commodity prices have remained low. Rainfall in the Ivory Coast has helped the progress of cocoa crops in the area.
Meanwhile, sugar futures also fell as Brazil's cane harvest reportedly makes good progress. The recent cold front may have boosted sugar content in the cane, Bridge News reports. India's southeast monsoon is expected to begin a few days earlier than usual, Bridge reported, potentially reducing the size of the next cane crop.
On the CSCE, July sugar fell 0.04 cents to 4.78 cents a pound.
Natural gas futures higher
Natural gas futures rose in mixed trading Tuesday as analysts expect the latest inventory report, slated for release late Wednesday, to reveal a rise in stocks. Some analysts believe the rise will be roughly equal to the increase seen last year, but estimates vary greatly.
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On the NYMEX, June natural gas rose 2.4 cents to $2.20 per British thermal unit.
Early estimates for the American Gas Association supply report call for a rise of anywhere between 58 billion and 100 billion cubic feet in natural gas stocks. A year ago, supplies rose 92 billion cubic feet.
Currently, temperatures are below-normal in the eastern U.S. and warmer in the Midwest. However, temperatures are not cold or hot enough to warrant the use of natural gas as a heating fuel or air conditioner power source.
June natural gas options expire after Tuesday's close and June natural gas futures will expire on Wednesday |
