BizAims

Today, June 11, 2008, the prices for oil in Asian countries have registered a record-high mark. It is the time when the American currency registers a little weakening against the European Euro. Despite this fact traders consider that the oil market will show some instability, being guided by supply concerns as well as the movement of currency.

The electronic trading at the New York Mercantile Exchange in Singapore showed a 57 cents increase of crude oil price, reaching a mark of $132 a barrel. The results arrived Tuesday, June 10, after the contract sank $3.04 to reach a level of $131.31 a barrel on dollar's improvement and viewpoints regarding slower demand after the government of the United States cut its oil consumption plans.

"There is no heavy buy, it's just currency play," outlined Mark Pervan, who holds the position of a senior commodity strategist at Australia and New Zealand Bank in Melbourne.

"The U.S. dollar has a mild recovery in the last couple of days but that has been curbed today, which gives oil trade a bit of confidence. In the short-term, currency movement has a big sway on sentiment," he added.

On June 11, the currency of the European Union in Asian countries was valued at $1.5475. It registered a slight increase from the previous day, when $1.5454 was offered for a euro in New York. However, this result is lower than the one registered on Friday, June 6, when the price of one euro was $1.5768. The American currency showed little change in regard to the yen, being valued at 107.38 yen after it improved by 2 yen on Tuesday.

The position of the dollar improved after the statement of United States Treasury Secretary Henry Paulson, who outlined that it is possible that he would intervene in the process of dollar stabilization. The statement led to an increase of sales by investors who bought oil and other commodities as a way of evading inflation. In addition, a strong dollar leads to an increase in oil prices for investors abroad.

According to the analysts questioned by Platts, a research company, the Energy Department of the Untied States is going to report about the last week's fall of oil inventories by 1.4 million barrels. At the same time experts looked forward for the supplies of gasoline to have increased by 1.1 million barrels.

The reports presented on June 10, showed that the U.S. Energy Department along with the International Energy Agency decreased their anticipations for global oil consumption for current year due to unstable prices, however, stating that the demand is still speeding up in developing nations, such as China.

The Energy Department mentioned that oil consumption in industrialized countries that are members of the Organization for Economic Cooperation and Development will fall this year by 240,000 barrels a day. It is worth mentioning that some of the OECD members include Japan, Britain, Germany and the United States.

The monthly report presented by IEA, showed that the energy adviser to Western industrialized nations with headquarters in Paris will cut by 0.9 percent its global demand increase in petroleum products, including gasoline, diesel and heating oil this year. The IEA also mentioned that the reconstructions that started after the earthquake, which occurred in China this year, will lead to an increase in oil demand by approximately 5.5 percent.

A certain pressure to the market was added after the reports stated that Saudi Arabia has increased its daily oil output by 500,000 barrels in the current quarter. It is worth mentioning that previously it was believed that this figure will show 300,000 barrels each day. Despite this fact experts believe that the move made by the Saudi Arabia had little effect on the price drop registered in Tuesday. "A couple hundred thousand barrels just isn't enough," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

Additional information on Nymex trading showed an increase by 1.9 percent in futures, leading to $3.3383 a gallon in June. July heating oil futures increased by 2.16 cents, reaching $3.8340 a gallon. As for July natural gas futures then these remained $12.435 per 1,000 cubic feet.