Both West Texas Intermediate and Brent crude benchmarks rebounded on Tuesday supported by rising tensions between Russia and the West and on expectations US motor gasoline inventories fell for a seventh straight week. Gains however were checked by the prospects of rising output in Libya, coupled with signs of a further thaw in relations between Iran and the West. Meanwhile, natural gas futures advanced amid forecasts for unseasonably cold weather in the US.
On the New York Mercantile Exchange, WTI crude for delivery in May traded at $101.24 per barrel at 11:24 GMT, up 0.8% on the day. Prices varied in a daily range between $101.44 and $100.68 per barrel. The contract lost 0.7% on Monday, capping two previous sessions of gains, and settled the day at $100.44 per barrel.
Meanwhile on the ICE, Brent futures for settlement in the same month were up 0.51% at $106.33 per barrel, having shifted in a range between day’s high and low of $106.55 and $105.90 per barrel. The European crude benchmark lost 0.84% on Monday to settle at $105.82. Brent traded at a premium of $5.08 to its US counterpart, down from $5.38 on Monday.
The oil market was pressured to the upside on Tuesday by renewed tension in Ukraine. Pro-Russian protesters seized arms in one city in eastern Ukraine, while declaring a separatist republic in another, a move which Kiev said was a replay of the events that preceded the annexation of Crimea last month. Kiev’s pro-European government attributed the seizure of public buildings as part of Moscow’s plan to justify an invasion in eastern Ukraine.
The oil complex also drew support amid expectations for a seventh consecutive drop in US motor gasoline inventories, even as refiners ramp up runs after seasonal maintenance. According to a Bloomberg News survey of eight analysts ahead of government data tomorrow, motor gasoline inventories are expected to have declined by 1 million barrels in the week ended April 4th, while distillate fuel stockpiles, which include diesel and heating oil, were probably unchanged. Crude oil inventories are projected to have gained 1.4 million barrels to 381.5 million.
Gains however were capped by the prospects of rising Libyan exports, coupled with hopes of further diplomatic progress over Iran’s nuclear program.
Meanwhile, on the New York Mercantile Exchange, natural gas for delivery in May traded at $4.498 per million British thermal units at 11:25 GMT, up 0.48% on the day. Prices held in a daily range between $4.513 and $4.471 per mBtu. The energy source slid 1.4% last week, despite a government report showed much-larger-than the five-year average inventory drop.
Cold blasts will return in the US around April 13-17th, as chilly Canadian air moves back in the US territory, bringing significant surge in natural gas and heating demand, NatGasWeather.com reported today.
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