No Significant Change in Current Oil Price while awaiting for European Plans

Oil prices did not change much while the market waits for the next move from Europe to try fixing its financial challenges.

In New York, the current crude oil price of the U.S. benchmark crude was higher by 2 cents, at $84 a barrel. In London, the Brent crude price fell by 5 cents to $98.80.

Ministers of finance and central bank leaders in the seven richest countries of the world recently discussed alternatives that European leaders are considering via conference call. However, no sufficient details have been announced. According to the U.S., it anticipates extra action in the coming weeks to boost the banking system of Europe.

Worries on the crisis in Europe have led to concerns about its possible effects on the United States and other countries that conduct business with them. Moreover, the crisis can possibly result in lower consumption of oil and its various finished products in the future.

New indications of the weakening economy of Europe came out with the report of Markit Economics that the continent’s PMI for countries utilizing the euro currency showed a drop from April to May. The decline was the sharpest in the manufacturing and services output since June 2009.

In the past month, the pace of service companies in the United States, like restaurants and retail stores, slightly grew faster. According to the Institute for Supply Management, its non-manufacturing activity’s index increased from April’s 53.5 to May’s 53.7. A reading over 50 signals expansion.

A majority of analysts anticipate oil demand and other energy commodities to stay low until the leaders in Europe come up with a concrete plan to solve their financial crisis. The oil supplies in the United States are at a peak level last seen in 1990, while inventories of natural gas are almost 35% greater than its average over the last five years.

Strategy Energy & Economic Research President, Mr. Michael Lynch, thinks demand would be higher if the economy of the United States was moving at a quicker rate. Until that happens, it will be difficult to anticipate more than a small demand increase.

Elsewhere in the energy markets, the heating oil price stayed the same, at $2.63 a gallon. Similarly, no change was posted by gasoline prices at $2.67 a gallon. As for natural gas, it increased by 2 cents at $2.44 for every 1,000 cubic feet.

Gasoline prices at the pump kept falling. The recent average of regular unleaded declined by 1.5 cents at $3.57. That price is less than 21 cents compared to last month.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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