WTI Crude oil eased on Tuesday and continued to fall on Wednesday morning trading at 106.99 down by 41 cents in the Asian session. Brent oil gave up 14 cents to trade at 111.31. Tuesday’s decline in oil prices came despite a bullish economic report from China, a key market for oil consumption growth. Chinese industrial production rose at its fastest pace in 17 months in August, authorities said Tuesday, the latest in a series of better-than-expected indicators pointing to a pick-up in the world’s second-largest economy. China’s industrial production rose at its fastest in 17 months in Aug, authorities said Tue, the latest in a series of better-than expected indicators pointing to a pick-up in China’s economy. The main gauge of output at China’s factories, workshops and mines increased 10.4% YoY in Aug
As tensions in the Middle East seemed to settle to a low boil with a possibility of a diplomatic solution in Syria, commodity prices eased. The tone in markets has shifted since Russia proposed Monday that Syria’s chemical weapons stock could be brought under international control in a bid to head off threatened US military strikes. US equities rose Monday and were rallying Tuesday, while oil prices have dropped as the prospect of US military action has declined. Diminishing worries about potential US military strikes on Syria had further sharpened investor appetite and eased safe haven trades. Syria has accepted a Russian proposal to give up chemical weapons and win a reprieve from U.S. action.
In a live address to the nation from the White House late Tuesday, Obama said delaying a decision on military intervention was necessary to give Russia’s plan to neutralize its ally’s chemical weapons a chance. “I have therefore asked the leaders of Congress to postpone a vote to authorize the use of force while we pursue this diplomatic path,” Obama said, noting that Secretary of State John Kerry would head to Geneva to meet his Russian counterpart on Thursday. However he warned that it was too early to tell if Russia’s plan would work, and said cruise missile destroyers would remain stationed in the Mediterranean, ready to strike on the Assad regime.
Traders will now take a look at fundamentals ahead of the EIA inventory due later today. WTI oil inventories probably declined by 2.1 million barrels to 358.1 million last week, according to the median estimate of 12 analysts surveyed by Bloomberg before a report from the Energy Information Administration That would be the lowest level since Aug. 31, 2012.
Natural gas climbed 18 points this morning after tumbling yesterday as reports that the Energy Information Administration’s inventory scheduled for release Sept. 12 may show stocks grew by 65 billion cubic feet in the week ended Sept. 6, according to the median of six analyst estimates compiled by Bloomberg. The five-year average gain for the week is 62 billion. Overnight weather forecasts turned warmer helping to give gas a boost after yesterday’s decline. Natural gas is trading at 3.60