Crude Falls On Moderate Demand Outlook

Crude is seen trading below $96.00 a barrel as the moderate outlook for demand and the ample supplies weigh on oil; yet the strong equity markets and the rising tensions in the Middle East tensions provide support.

“Primarily the outlook for demand growth is pretty moderate and the markets are well supplied with high inventory levels, so we`ll struggle to get past the resistance levels”, said Ric Spooner from CMC Markets, Sydney.

- Crude oil is trading around the $95.90 a barrel after falling from the highest $96.49 to the lowest $95.78

- Brent is trading around $104.57 a barrel as of this writing after falling 0.07% or $0.07

However, the strong equity markets are limiting the losses. Asian stocks edged higher on Monday boosted by the record closing high for the Dow and S&P 500 following the positive consumer sentiment and future economic activity data on Friday.

Oil markets were also supported by the rising tensions in the Middle East. Syrian government forces started an offensive against rebels, renewing concerns about a possible disruption in oil supplies from the region.

“If fighting in Syria spills over into Iraq and interrupts production there, that would be problematic. Traders always get nervous when these kinds of things are going on, as Middle East tension plays on prices”, said Robin Mills.

Markets will be closely watching this week the minutes of the Federal Reserve meeting, due on Wednesday, as any signs of monetary policy change could change the outlook for economic growth in the world’s largest oil consumer.

Investors will await the outcomes of other central bank meetings this week including Bank of Japan and Bank of England, while China will release its flash manufacturing PMI, Germany and UK will release the GDP and the U.S. will release the durable goods orders.

- Natural gas is trading at $4.131 per cubic feet after rising 1.87%

- Gasoline is trading at $2.9069 a gallon being almost unchanged from the opening

- Heating oil is trading at $2.9426 a gallon after rising 0.19%