Crude oil futures were trading in a range with a slight positive bias tracking a similar movement in the international markets, where prices gained on weak dollar against the euro. However, oil futures witnessed cautious movement yesterday, as the market awaits release of weekly US oil inventory report on later today. Nymex crude oil declined around 1 percent yesterday on the back of more than expected rise in US crude oil inventories along with rise in the Seaway pipeline capacity to 175,000 barrels from 150,000 barrels a day which runs from Cushing, Oklahoma to the Gulf Coast.
The American Petroleum Institute report last night, US crude oil inventories rose more than expected by 3.2 million barrels to 364.05 million barrels for the week ending on 18th January 2012. Gasoline inventories declined around 1.6 million barrels to 229.61 million barrels and whereas distillate inventories gained by 1.3 million barrels to 132.07 million barrels for the same week. The US Energy Department is scheduled to release its weekly inventories later today and US crude oil inventories is expected to rise by 1.8 million barrels for the week ending on 18th January 2012. Gasoline stocks are expected to gain by 1.5 million barrels whereas distillate inventories are expected to increase by 0.4 million barrels for the same period.
The International Monetary Fund cut its global growth forecasts and now projects a second year of contraction in the euro region as progress in battling Europe’s debt crisis fails to produce an economic recovery. Global forecast less the eurozone was positive; the EU is the center of the crisis. Saudi oil minister Ali al-Naimi held meetings in Riyadh with the head of the International Energy Agency (IEA) and the Secretary-General of OPEC, Saudi state media reported on Wednesday.
Crude oil on NYMEX was floating near its four month high ahead of the US vote on the debt limit ceiling. US lawmakers voted and approved a bill to move the debt ceiling decisions and debate until May 18th, giving the Treasury the ability to fund the government until that point with no debt ceiling limitations. The vote in the Republican-controlled House was at 285-144, with no votes coming from 33 Republicans and 111 Democrats. Crude along with global risk assets climbed after the vote as the US dollar weakened as traders in more positive moods went off looking for more risk.
Investors are also keeping an eye on the World Economic Forum in Davos, Switzerland, where business and political leaders have gathered to discuss economic issues. In years past Davos was much more of a market focus, with Angela Merkel and Ben Bernanke keynote speakers. This year’s meeting does not have global attention.
A bipartisan group of more than half the 100-member U.S. Senate has urged President Barack Obama to approve the northern leg of the Keystone XL pipeline project, which would connect Canadian oil sands to refineries in Texas. This would provide cheaper transportation of crude oil and a better supply line. The project is likely to be approved as it would also create jobs and help the ailing economy.
Crude oil is trading at 95.56 climbing 33cents this morning after falling close to 95.00 yesterday. Natural gas remains in a fairly tight range trading right under the 3.60 level.