Inventories of crude oil are likely to drop for a second-straight week in the U.S., pushing up oil prices on Tuesday, according to published reports.
In anticipation of a not-yet released report from the U.S. Department of Energy stating supplies dropped by as many as 3 million barrels because of tempests manifesting in the Gulf of Mexico, the energy commodity gained in value in the U.S., which is the globe's top consumer of oil. Bloomberg reports the immediate climb was roughly 2 percent within hours of the opening bell on Tuesday morning.
Bloomberg reports Angela Merkel, chancellor of Germany, said resistance from Finland regarding Greece's second bailout since spring 2010 will be confronted appropriately by the powers-that-be in Europe. Merkel, as well as additional German authorities, speaks from a bully pulpit since the nation's economy is the euro zone's largest and it serves as a pace setter regarding economic and financial happenings. France's economy ranks as the euro zone's second largest.
"We are probably going to see a big drop in tomorrow's report because of Tropical Storm Lee and the remnants of Hurricane Irene," research vice president Phil Flynn with PFGBest in Chicago told Bloomberg. "There's also talk that the Europeans will announce new ideas for the bailout for Greece. Between the two the oil market should experience smooth sailing today."
But global demand for the energy commodity might be waning, Dow Jones Newswires reports. The Organization of Petroleum Exporting Countries sent signals on Monday that some member nations might be poised to slash output of the energy commodity due to the reduced pace of the global economy.
Though the U.S. economy is going through motions indicating a slowdown, analysts expressed confidence about the market for crude oil. Euro zone debt concerns also are significant and impact the price of oil yet analysts remained sure that the market has been able to adapt and adjust to those volatile influences.
"Crude markets continue to exhibit extreme tightness … arguably it is the continuation of disruption in the periphery of the European market that is the main factor driving a tighter market balance," states a client note from JP Morgan analysts.
While the embattled oil-rich nation of Libya is preparing to produce and export crude oil at a faster pace than anticipated, the oil market is watching closely given the nation's instability. Opposition fighters still are attempting to subdue loyalists to Muammar Gadhafi, the former leader who was ejected last month after 42 years of autocratic rule.
The Transitional National Council intends to keep oil production going but attacks by Gadhafi loyalists against those opposition fighters demonstrate resumption of oil production is easier said than done.
The analysts from JP Morgan noted the less-than-stellar economic forecast could manipulate demand for the energy commodity and set conditions to establish a balance.
"The fact that spot prices are not moving materially higher … ties in with our core assumption that the current level of peak stress from Libya will ease towards the end of the year," the research note states.
Reuters reports demand growth for oil throughout the globe has been reduced by 160,000 barrels per day, according to a monthly report issued by the International Energy Agency.
August saw U.S. import prices drop because of reduced expenses and costs for fuel, according to Reuters. Production of oil will increase as will exports of the commodity from the nation largely because of adjustments to energy taxes that will preserve Russia as the globe's top producer of the energy commodity. The second spot is occupied by Saudi Arabia.
This past weekend's production at Hovensa refineries in St. Croix remained at 350,000 barrels per day and were not impacted by Tropical Storm Maria.