Crude jumps despite rising output forecast

Strong industrial production data helped the price of US light crude oil gain more than 1% today, apparently unchecked by the US Energy Department upping its forecast for annual production.

US crude oil futures for January had climbed to $97.70 a barrel by mid-afternoon in New York, representing a rise of 1.2%, boosted by a number of reports showing increased activity in the US manufacturing sector.

Markit’s flash reading for December manufacturing PMI came in at a level of 54.4, indicating expansionary activity, while November industrial production advanced 1.1%, driven by utilities output, comfortably exceeding the 0.5% that had been forecast by a Reuters poll of economists.

Industrial production is a procyclical indicator, moving in step historically with the business cycle, and demonstrating a close correlation with economic activity. A sharp rise in industrial production bodes well for fourth-quarter GDP, therefore, and suggests demand for oil in the US, the world’s largest oil consumer, should remain robust.

Demand will have to remain strong in order to keep up with rising supply: the Energy Information Administration, the statistical division of the US Energy Department, revealed today that it had upwardly revised its annual output forecasts. The EIA now predicts that US oil production will rise by 800,000 barrels per day annually to a peak of 9.5 million in 2016, close to 1970’s record output of 9.6 million barrels per day.

Advancements in recovery techniques have led to a shale oil boom in the US, reducing the country’s reliance on imported oil. The EIA sees OPEC’s share of world oil production dropping below 40% before 2016, when it is forecast to pick up again.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.