Commodities trading outlook: crude oil and natural gas futures

WTI and Brent futures were lower during afternoon trade in Europe today, as the US posted official weekly figures on oil inventories. Meanwhile, natural gas futures were also lower, as analysts expect another triple-digit gain for blue fuel stocks be reported tomorrow.

West Texas Intermediate futures for settlement in August traded for $104.65 per barrel at 14:38 GMT on the New York Mercantile Exchange, down 0.66%. Prices ranged from $105.50 to $104.65 per barrel. The US contract dropped 0.03% yesterday, after a 0.35% drop on Monday.

Meanwhile on the ICE in London, Brent futures due in August stood for a 0.69% drop at $111.52 per barrel. Daily high and low stood at $112.42 and $111.41 per barrel, respectively. Brent’s premium to WTI stood at $6.87, after last session’s closing margin of $6.95. The European contract dropped 0.06% on Tuesday, after a 0.83% drop on Monday.

US oil report

The US Energy Information Administration (EIA) posted its weekly oil inventories report for the seven day through June 27 today. The log revealed a 3.155 million-barrel draw for commercial crude oil inventories, after the private American Petroleum Institute (API) had suggested a 0.9 million-barrel draw on Tuesday. A Bloomberg survey projected a 2.4 million-barrel drop. The previous reading, for the week through June 20, showed crude inventories had added 1.7 million barrels.

Oil at Cushing, Oklahoma, the delivery point for the NYMEX contract and the largest hub in the US, was reported at 20.5 million barrels for a 1.3 million-barrel draw, after a gain of 400 000 was logged for the previous week. Meanwhile, hubs at the Gulf Coast lost 3 million barrels, after 2 million were added last week.

Domestic production of crude oil was unchanged for a reading of 8.442 million barrels per day (bpd), after minor drop was recorded in the report for the week ended June 20. Meanwhile, imports of crude were slightly lower at 7.265 million bpd, after minor gains last week. Inbound shipments of crude have by about 1.4 million bpd over the past month, about 20% of current imports.

Gasoline inventories dropped 1.235 million barrels for the week through June 27, while the API had reported a 0.4 million-barrel draw, after last week saw 0.7 million barrels added. Distillate fuels stockpiles levels grew by 0.975 million barrels, while the API posted a 4.4 million-barrel increase on Tuesday. Previously, distillates inventories had added 1.2 million barrels in the week through June 20.

Refinery utilization rate was increased by 3% for a standing of 91.5%, after a 1.4% increase was logged in the previous report. Gasoline production this week grew by some 0.4 million bpd for a standing of 9.436 million bpd, after a massive 10%, or 0.8 million bpd drop was recorded last week. Distillates output averaged 4.984 million bpd for a minor weekly increase, after another unimpressive increase was recorded last week.

Natural gas

Front month natural gas futures, due in August, dropped 1.80% at the New York Mercantile Exchange to trade for $4.375 per million British thermal units at 14:40 GMT today. Prices ranged from $4.459 to $4.363 per mBtu. The contract dropped 0.13% yesterday, reaching a monthly low of $4.403 per mBtu, after it added 1.18% on Monday.

The US Energy Information Administration (EIA) will post its weekly reading on natural gas inventories for the seven days ended June 27 tomorrow. NatGasWeather.com predicts a gain of slightly over 100 Billion cubic feet (Bcf).

The government agency revealed a 110 Bcf jump in stocks during last week. A wide array of estimates were cast ahead of the report, ranging from 93 to 107 Bcf. NatGasWeather.com had predicted a 102-107 Bcf increase, while Tim Evans, an energy analyst at Citi Futures in New York, gave a 93 Bcf figure for Bloomberg.

Total gas held in underground storage hubs was still 27.4% lower than last year’s levels during the comparable period. However, the EIA has suggested gains will continue to be above-average, and that most likely inventories will be completely replenished ahead of winter heating season.

“As we get close to July and August, the peak-demand months, we should expect some heat,” Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami, said for Bloomberg. “We sold off pretty hard last week after another triple-digit injection. We will see what July brings, but we are going to have another triple-digit this week and we will probably have another one the following week because the Fourth of July.”