Today is an important day for oil futures prices ahead of inventory data report and FOMC rate decision ending with FOMC meet.
As per American petroleum institute, crude oil and distillates stocks has been declined in the last week, whereas stock piling is witnessed in gasoline. Remember in recent months, the API reports has been more wrong then right, the markets are now ignoring these numbers.
The US energy department inventory is due for release later today, where we can expect crude oil stocks to decline. However, ahead of summer season refiners are increasing their production to meet the demand which may lead to higher stocks of gasoline and distillates.
With the global slowdown, demand is currently weak. Markets are hoping a push from the FOMC may stimulate economic activity in the US, helping increase demand. Overall, inventory report may act as a positive driver for oil prices. Currently, most of the Asian equities are trading on higher side on optimism from FOMC meet with a monetary stimulus. Crude oil imports have been increased by more than 7 percent in the month of May, which is also expected to support oil price trend.
The third round of talk with Iran are scheduled to continue on a positive note, as geopolitical turmoil seems to be at an all time low. The embargo is set to go into full effect next month. Any threat with a mid point at Strait of Hormuz may support oil to take cues on supply concern. However, another round of talk is expected very soon though the date is not yet declared. Most importantly, market is eyeing for FOMC rate decision which may add positive stimulus for oil prices.
This morning in electronic trading gas futures prices are trading above $2.561/mmbtu with gain of near than 1%. Today we may expect gas prices to continue the positive trend supported by its intrinsic fundamentals. As per National Hurricane centre, there are 60 and 70 percent chance of tropical storm formation near gulf coast region which may create supply concern to add positive direction in on gas prices. As per US Energy department, natural gas storage is expected to increase by 64 BCF in the last week. Consumption of power sector have also increased by 6 percent, which may support gas prices to remain on higher side. As per US weather forecast, temperature is expected to remain high in eastern region, which may create demand for gas consumption.