Data Pushing And Pulling At Crude Oil

Conflict-Iran-pushed-crude-oil-prices-strengthened BNSCrude oil edged higher on this morning, extending the prior session’s nearly 2 percent jump, after the Federal Reserve gave no indication of when it will curb economic stimulus, assuring commodity markets of continued liquidity flow for now. According to Reuters, China’s factory activity shrank for a third straight month in July to its lowest level in nearly a year as new orders fell, a private survey showed on Thursday, signaling the persistent pressure on the economy has extended into the third quarter. The HSBC Purchasing Managers’ Index (PMI), compiled by Markit Economics Research, fell to 47.7 in July from June’s 48.2. It was the weakest reading since August 2012, and matched a preliminary figure published last week. A reading below 50 indicates a contraction of activity while one above shows expansion.

“With weak demand from both domestic and external markets, the cooling manufacturing sector continued to weigh on employment,” said Hongbin Qu, China chief economist at HSBC.

While keeping the door shut for big stimulus, the government has unveiled a series of polices to boost spending in social housing, urban infrastructure, high-speed rail and energy-saving industries, while offering tax breaks for small firms.

China is one of the world’s largest consumers of crude oil and energy products and the worrisome data is limiting the commodity this morning. Crude oil is trading at 105.61 trading in the green after US data supported the rise. Nymex crude oil prices increased around 1.9 percent in the yesterday’s trade taking cues from more than expected rise in the US GDP data which lead to expectations of rise in demand for the fuel weakness in the DX supported an upside in prices. However, sharp upside in prices was capped on the back of unexpected rise in US crude oil inventories. Crude oil prices touched an intra-high of $105.43 and closed at $105.1 in yesterday’s session.

The US Energy Department (EIA) reported that, US crude oil inventories rose unexpectedly by 431,000 barrels to 364.60 million barrels for the week ending on 26th July 2013. Gasoline stocks gained by 770,000 barrels to 223.50 million barrels and whereas distillate stockpiles slipped 466,000 barrels to 125.84 million barrels for the last week. OPEC crude output hit a four month low in July as unrest and conflict in Libya and Iraq disrupted supplies, a Reuters survey found on Wednesday, a further unplanned cutback bringing supply closer to the organization’s target.

Natural gas is trading at 3.442 flat this morning ahead of the EIA inventory report due in the afternoon session. Natural gas ended slightly higher on Wednesday, but mild weather forecasts for the next two weeks that should slow air conditioning demand helped limit the upside. US Energy Information Administration (EIA) natural gas inventory are expected to increase by 55 billion cubic feet (bcf) for the week ending on 26th July 2013.


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