The beginning of the week starts with mixed oil prices in early Asian session. The US market will not open today due to the President Days Holiday. Yet, there is a downward trend supported by US industrial production decline.
This Monday crude oil fell by 27 cents to trade at $96.14 per barrel.
The trading volume of oil has contracted on unexpected decline in US industrial output. This raise more concerns for the sluggish economic performance.
Last Friday, official data of the output production in the United States was posted. This was a major driver since the country has the biggest economy and oil consumption. According to official data production fell 0.1% in January as manufacturing output contracted by 0.4%.
In January US industrial output dipped after the largest back-to-back gain in thirty years. Production at mines, factories and utilities dropped 0.1% during the last month. The fall came after a 0.4% gain in December.
At the same time the Federal Reserve Bank of New York’s general economic index rose with very high growth rate to 10. This is the strongest value since May 2012. The index was -7.78 in January and -7.3 in December.
At the first day of this week the US dollar gained strength against the other currencies. This will cause additional effect on dollar denominated commodities such as oil.
Asian Lunar New Year holiday celebrations weaken oil price and contracted trading during last week. At the same time dealer also decreased their activity before the meeting of G20.
More than billion Asians celebrated a week of festive holidays for the Year of the Snake. This weakened the oil demand in China. Since the country has the second largest economy the effect on the market was inevitable.
In Friday finance ministers from G20 states gathered in Moscow for a meeting. The meeting was purposed to bring security on the market. Ministers want to prevent the “currency wars” that has been speculated lately. If the largest economies are trying to boost national growth they will hurt the global market.
Last Wednesday the IEA cut its global oil demand forecast for 2013. Last month the International Monetary Fund trimmed made a growth slowdown forecast for 2013. The estimations were cut from 3.6% to 3.5%. The IEA forecast was cut in consequence by 85,000 barrels per day.
At the moment the 2013 oil demand is viewed differently by the international organizations. While their estimations differ, the price movements will be limited.
The International Energy Agency has lowered its demand forecast. At the same time Organization of Petroleum Exporting Countries and US Energy Information Administration have raised their world oil demand projections.