Production and stocks: according to EIA weekly report, US stocks of oil (including strategic stocks) during the week that finished on August 31 have reduced 7.4 mln.bars, to 357.1 mln.bars. Analytics were expecting the stocks to reduce by 5.325 mln.bars. Such shortage is explained by recent reduction of US crude oil recovery in the Gulf of Mexico by 95%, natural gas – by 73%. Refining capacity has dropped by 6.7% because of tropical Isaac hurricane. Next week the majority of plans will return to the normal regime. The storm has reached the 1st category, having resulted in no physical damage to crude oil assets in the Gulf of Mexico.
According to OPEC report for August, crude oil demand in 2012 remains unchanged, namely, at the point of 0.9 mln.bars/daily. In 2013 the demand is predicted to rise to 0.8 mln.bars/daily, but the forecast may be reconsidered to reduction.
Geopolitical situation: it is possible that Israel will start military actions against Iran.
Bullish factors:
1. Shortage of stocks and crude oil production by refineries in the Gulf of Mexico because of Isaac hurricane.
2. The growth of S&P 500 to the 4-year maximum.
3. Geopolitical situation in Middle East.
Bearish factors:
1. Reduction of global economic growth and European debt crisis, EIA prediction about smaller global demand for crude oil in 2012-13.
2 Shortage of demand in China.
3. 3.5-year maximum of crude oil recovery by OPEC countries.
According to the Analytics Team of Commodity Trading Department of , bearish and bullish factors average out at crude oil market; therefore, the situation will most likely turn into a flat zone.
