Oil Futures Slip Ahead Of Key Supply Data
Benchmark U.S. crude-oil futures lost ground in electronic trade Wednesday, shrugging off data showing a large drop in crude inventories as the market awaited confirmation of the numbers from a separate government report.
May crude-oil futures fell 10 cents, or 0.1%, to $88.62 a barrel during Asian trading hours, after the contract ended just fractionally higher in the regular New York Mercantile Exchange session.
The mild decline came despite an unexpected drop in U.S. oil supplies shown in the American Petroleum Institute’s (API) weekly report.
Crude supplies dropped 6.7 million barrels for the week ended April 12, confounding a forecast for a 1.25 million-barrel climb seen in a Platts survey of industry analysts.
May crude futures did climb immediately after the report, briefly breaching the $89 level, before heading back down as Asian financial markets were opening.
Analysts at Citi Futures said that crude’s failure to capitalize on the data suggested investors were awaiting confirmation from the more closely watch U.S. Energy Information Administration, slated for release later Wednesday at 10:30 am Eastern time
“The muted price response to this report suggests some skepticism as to its accuracy, and we would agree that there is some change the more definitive [EIA] data … may show a somewhat different result,” Citi Futures wrote in a note early Wednesday.
More generally, they said that recent crude-futures action showed a decoupling from stocks and other asset classes after a period of oil tracking these securities more closely.
“The contrast [of oil’s fractional gain Tuesday] with the recoveries in the S&P 500 and other commodities such as the metals highlights the extent to which the focus has shifted away from the simplistic correlated ‘risk on’ or ‘risk off’ trade flows [and] onto the oil market’s direct physical fundamentals, including a projected second-quarter global supply/demand surplus,” they wrote.
Adding a bit of pressure on crude prices, the U.S. dollar traded modestly higher early Wednesday, with the ICE dollar index rising to 81.917 from 81.781 late Tuesday in North America.
A rising dollar can often act to depress prices in crude oil and other dollar-denominated commodities, as it makes them more expensive to holders of other currencies.
Despite the small drop for Nymex crude, rival London-traded benchmark Brent North Sea crude rose in price, with the June contract up 23 cents, or 0.2%, at $100.14. The advance allowed Brent to reclaim its triple-digit price after closing below $100 on Tuesday for the first time since July.
Elsewhere in the energy complex, May gasoline futures added a penny for a 0.4% gain to $2.79 a gallon despite a surprise 253,000-barrel rise in gasoline inventories shown in the API data. Analysts had expected a 1.1 million-barrel drop, according to the Platts survey.
May heating oil sat little changed at $2.81 a gallon. The API data had also shown an unexpected rise in distillate stockpiles.
May natural gas rose 2 cents, or 0.5%, to $4.18 per million British thermal units, matching its 2-cent advance Tuesday after Goldman Sachs recommended investing in the commodity.
Marketwatch
