WTI futures fluctuate ahead of US data, inventories levels

West Texas Intermediate crude swung between gains and losses after falling by more than 1% on Monday on expectations a government report tomorrow will show US fuel inventories gained for a third week, indicating soft demand in the worlds top consumer. Prospects for the return of additional Iranian oil to the global market and an expected recovery of output at North Seas Buzzard field pressured prices. Upcoming US data fell in investors focus.

On the New York Mercantile Exchange, WTI crude for delivery in March rose by 0.16% to $92.16 per barrel by 8:09 GMT. Prices shifted in a daily range between $92.38 and $91.74 a barrel. The US benchmark lost more than 1% on Monday after losing almost 7.4% in the previous two weeks.

Meanwhile on the ICE, Brent futures for settlement in the same month lost mostly unchanged by 8:10 GMT at $105.91 a barrel, down 0.06% on the day. Prices held in a range between $105.59 and $106.24 a barrel. Brent was at premium of $13.96 to its US counterpart yesterday, based on closing prices.

The oil market was pressured on Tuesday ahead of a government report expected to show US fuel stockpiles rose for a third straight week, a sign for weak demand in the worlds top consumer. According to the median estimate of eight analysts surveyed by Bloomberg, the Energy Information Administration will likely report a 2.2-million-barrels increase in US motor gasoline supplies, while distillate fuel inventories are expected to have risen by 1.38 million barrels in the week ended January 10th.

US crude inventories are projected to have declined by 1.15 million barrels after they had fallen to 357.9 million in the prior six weeks. Analysts however attributed most of the withdrawal to tax-avoiding at year-end.

David Lennox, a resource analyst at Fat Prophets in Sydney, said for Bloomberg: “There’s a lot of finished product in the U.S. We don’t expect to see a draw-down and that’s going to keep pressure on prices.”

The industry-funded American Petroleum Institute will release its separate report later today. APIs statistics however are deemed less popular than EIAs numbers as they are based on voluntary information provided by operators of refineries, pipelines and bulk terminals, while the government requires reports to be filed with the EIA.

Market players will also be keeping a close watch on todays upcoming allegedly weak US economic data. US retail sales are expected to have registered a minor 0.1% advance in December, well below Novembers 0.7% expansion, while sales excluding automobiles probably posted at 0.4%, the same as in the previous month.

Also in investors focus, the Euro zones industrial production, due to be released at 10:00 GMT, probably expanded by 1.4% in November, rebounding from a 1.1% decline a month earlier. Year-on-year, the single currency blocs industrial output likely jumped by 1.8% in November, up from the previous periods 0.2% advance.

Iran deal

Raising fears over a jump in global supplies, the Iranian Foreign Ministry and the European Union said on Sunday that the deal between Iran and six world powers which was struck in November will come into force on January 20th. A diplomatic source said on Monday that the counterparts will start talks on finalizing the settlement in February.

An expected lift of tough sanctions on Irans crude exports will bring as much as 1 million barrels of oil per day back to the global market, dragging on prices.

ANZ analysts said in a note, cited by CNBC: “Whilst the weekend pact doesnt mean an immediate supply glut, its another challenge for OPEC and global oil markets as Libya and Iraq are also forecasting stronger production.”

Oil Minister Abdelbari Arusi said last week that Libya is currently producing 650 000 barrels per day, of which 510 000 bpd is being exported. Output almost tripled after creeping at little over 200 000 bpd in December following a rare negotiation success for Prime Minister Ali Zeidan to reopen the western El Sharara oilfield. The field is currently producing 300 000 bpd, and is yet to reach its full capacity of 340 000 bpd.

Output levels however remained uncertain as eastern ports remained under the control of rebel groups. In another escalation of tension on Saturday, gunmen killed the country’s deputy industry minister, Hassan al-Drowi.

Easing some supply concerns, North Seas Buzzard oilfield, Britains biggest, is expected to return to normal operational levels in the coming days after recent supply outages, its operator Nexen said on Monday.