The Energy Space

Energy Price Outlook
Oil markets may continue their sideways trend this week, as the trade continues to face pressure from a lack of progress on the fiscal cliff. Background pressure will remain in effect from growing domestic oil production, elevated oil inventories, and last week's hold at the 50-day moving averages in Brent and WTI. Opposing support received a boost last week from the hikes in 2013 demand estimates by both the EIA and IEA, growth in Chinese and European PMI data on Friday, and by weakness in the dollar sparked by improvement in the European debt crisis. We would continue trading oil markets as a trading affair in the near-term, as the market remains fairly priced.

The oil markets advanced throughout the overnight hours on the back of improvements in Chinese and Eurozone PMI data. The trend in Chinese PMI has been recovering nicely in recent months and should boost oil prices, as shown in the chart below. While the Chinese stock market advanced 4.3% on the news, the U.S. stock market wasn't as impressed and sold off on the day despite a solid improvement in industrial production. The Brent-WTI spread widened on BP's announced delay to its Whiting refinery upgrade....1279 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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