Slight Change in Crude Oil Futures after US GDP Declines

The recent prices of crude oil futures did not change much after the less than expected decline of 2.2% for GDP growth of the U.S in the first quarter. Economists polled by the Dow Jones Newswires had anticipated the Department of Commerce to report an increase of 2.6%.

Crude oil prices moved slightly lower with the figures, but it failed to obtain any strong downward force. According to traders, position adjustment before the coming expiration of reformulated gasoline blendstock for May delivery was causing a slight carryover to purchasing in crude. The weakness in the dollar following the GDP report also enticed buyers.

According to traders, NYMEX light-sweet crude oil prices for June delivery are still having challenges in breaking out from the $101 to $105 range in which it traded in the current month.

Concerns about an increase in the debt crisis of Europe are maintaining pressure on oil prices with concentration on Spain, where reports show its unemployment to have reached its highest level in 18 years.

As a response to the weakening financial and economic outlook of Spain, Standard and Poor’s Corp, the international credit ratings agency, recently downgraded the rating of the Spanish government debt from A to a BBB+.

According to S&P, the budget trajectory of Spain since last year declined to a worse level than expected. Furthermore, it said that there is a growing possibility that the government will have to provide help for the banking sector, which has been greatly affected by the increasing losses in the real estate market.

In the NYMEX market, crude oil futures for June delivery traded lower by 5 cents to reach an oil price per barrel of $104.50. In London’s ICE, Brent crude prices for June delivery moved lower by 16 cents to reach a price per barrel of $119.76.

BNP Paribas Prime Brokerage Mr. Tom Bentz, said that the GDP figures was lower than anticipated, and the market dipped slightly. However, he said that they are still hanging on. Recent NYMEX futures stayed at more than $101 per barrel, indicating some level of hope for the commodity. However, oil prices failed to move beyond the $105 per barrel mark, which is a level that could lead to a crude price per barrel of $108 according to well-established technical analysis.

Bentz said that worries surrounding the demand for oil in Europe and the United States keep crude oil prices in check. The market is keeping a close eye of Spain, and it will be a headwind that may affect demand.

May delivery’s reformulated gasoline blendstock was lower by 0.18 cent to reach $3.1815 per gallon. Heating oil prices for May delivery were lower by 0.75 cent to finish at $3.1869 per gallon. Both prices were higher than session lows.

By: Chris Termeer