FXEmpire | December 26 2012 2:25 EST
WTI crude oil prices are trading below $88.6down by more than 0.20% this morning driven by persisting concern on the US budget talk. There is no major development witnessed on budget talk in the over the holiday. Republican speaker Boehner said he is ready for the bargaining on tax cut level, whereas Obama did not mention any standoff. Traders may expect oil prices to remain subdued though a little pullback can be expected during Asian hour.
An upside trend in Asian equities might be limiting fall in oil prices. Crude prices were slightly lower Monday in light volume pre-holiday trade, with investors concerned over the slow progress of negotiations aimed at averting a potential budget crisis in the U.S., the world’s largest oil consumer. Oil prices fell sharply Friday and remain under pressure after House Speaker John Boehner unexpectedly disbanded the House of Representatives until after Christmas, as he failed to find support among his fellow Republicans for a plan that would increase taxes on millionaires. While oil prices remain vulnerable to the tussle between the White House and a Republican-controlled House, analysts say success in reaching an agreement could fuel a rally in oil.
A short-term bullish case can still be constructed for the oil complex once an agreement is reached on resolving the fiscal cliff problem, While fiscal negotiations will continue to crank up price volatility, other U.S. macro guidance remains tilted in a bullish direction as was seen again recently in personal income and consumer sentiment data.
Projecting into the New Year, analysts say the oil market demand-supply balance is unlikely to change a great deal, but prices could be driven by a host of geopolitical problems that could more than offset the effects of a global economic slowdown. Traders will also closely monitor EIA inventories delays this week due to the holiday
Natural gas futures closed lower on Monday, in a holiday-shortened session, pressured by near record-high supplies and concerns that winter will not turn out cold enough to whittle down the huge amount of gas in inventory. This morning the US saw temperatures drop as a freeze hits the south and the east, which might help see residential usage surge. Natural gas continued to decline this morning trading at 3.346 off by 0.024. There are no major economic data releases due for today. According to the US Energy department natural gas storage has declined by 79bcf, so, higher draw down of inventory may support gas prices.
Energy prices are expected to remain range bound for the next few days with continued low volume.
Click here to read Crude Oil Technical Analysis.
Originally posted here