It seems the acronyms for energy related entities that make comments that have an impact on price discovery are plentiful at a minimum. There is the EIA (Energy Information Administration), the API (American Petroleum Institute), OPEC (Organization of Petroleum Exporting Companies), IMF (international Monetary Fund), the list goes on and on. Almost daily we here comment from one or more of these organizations, some that are attempting to simply reveal the fundamental facts and some that require a bit more thought as their comments are most likely strategically released to support their own interests or positions. Today is no different as we hear from two different economic bodies on their outlook for energy demand globally and they couldn`t be more polarizing.
On one hand we have the IEA (international Energy Agency) reporting that global demand for oil should increase sharply over previous forecasts for the year as reduced prices have created a `organic stimulus` package that is starting to manifest itself economically.
Paradoxically, the World Bank released a more broad based economic out look that predicted much less growth for the year citing 2.8 percent globally, a sharp reduction from its previously stated 3 percent level. The result of these seemingly polar opposite assessments has been to halt the now several day rally in crude oil and even force a mild sell off as the price discovery reverts back to the middle of the recent range approaching the anchor of 60 dollars once again.
Specific energy demand fundamentals aren`t exactly congruent to broader based economic out looks though rarely do you see the two rend themselves so completely from one another. It can certainly cloud the ability to divine direction based on fundamental input. Today`s US economic data can certainly take steps to either confirming the World Banks view or possibly continuing the recent trend of US data out performing global data, creating potential greater demand domestically which could manifest itself in the narrowing spread between WTI crude and Brent crude.
Natural gas remains relatively elevated in the high 2.80`s as the market waits for the inventory data. The past two weeks have been bearish with greater than expected builds. Today the expectation if for 112 BCF change from last week. I would expect a more significant reaction if the report is bullish with a less than expected build as there is more real room to rally than if it were a bearish report as the price is already still very low historically.
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