Chinese news of yuan free float (click here for MB update) had its affect on crude oil as well and NYMEX light sweet crude oil opened up and touched a high of $ 78.92/ barrel against last week’s close of $ 77.18. However it retreated back to $ 77.82 towards close as impact of the same was said to be limited.
Crude oil traded with a negative bias for the next three days under the effect of a surprise rise in US oil inventories. Inventories rose by 2 million barrels against an expected decline of 1 million barrels. This was taken as a sign of reducing demand from US. Negative hosuing data also weighed on the prices.
But Friday turned the table in favor of bulls. News that a tropical disturbance on the Carribean Sea can develop into a storm pushed the prices up by $ 2.35. As per a news report, the tropical storm has a 30% chance of developing into the storm and threatening production in the Gulf of Mexico region.
Price settled at $ 78.86/ barrel, up $ 1.68 from last week's close and up $ 2.51 from last week's low.
Storms in the Gulf harm crude oil production and consumers in anticipation of a price rise pre-pone their purchase which leads to an increase in prices even before the effect of storm is felt. Thus we expect prices to trade with a positive bias for the week. However, there will be volatilty in the prices and any news regarding storm will be very closely monitored by the traders.
CAclubindia
