Oil spot price: WTI retraces from yesterday’s jump; Brent hits 2 month low

on Jan 16, 2014
Updated: Oct 21, 2019

_iNVEZZ.com: Thursday, January 16th:_

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**West Texas Intermediate**
West Texas Intermediate (WTI) crude has thus far today been retracing from yesterday’s 13-day high of $94 a barrel and is currently trading at $93. WTI yesterday gained some 1.7 percent on the back of a larger than forecast drop in US Crude Oil Inventories, which fell to a 22-month low.
According to data from the Energy Information Agency (EIA) inventory report, crude oil supplies declined by 7.7 million to 350.20 million barrels last week.

Gasoline stocks rose more than expected – by 6.2 million to 223.10 million barrels, while distillate stockpiles fell by 1.02 million to 124.0 million barrels.
The Crude Oil Inventories have lost around 41.2 million barrels since 22 November – the biggest seven-week drop since 1982.
“It’s a big surprise on the inventory number,” said Michael McCarthy, a chief strategist at CMC Markets. “It was a big draw. We have a clear short-term uptrend in place now.”

A rise in total fuel consumption by 3.5 percent to 18.9 million barrels a day, the first increase for past four weeks, coupled with estimates of a rise in demand for the fuel after the World Bank raised its global growth forecast, also lent support to the price.
However, a sharper jump in prices was limited by an increase in US crude oil output which rose by 14,000 to 8.16 million barrels a day last week. It is the highest level since 1988. Additionally, a decrease in operating capacity by 2.3 percent to 90 percent in US refineries also capped further gains in prices.

“People feel more confident about the economy at the moment, and that’s supportive for oil. But the reality is there’s a lot of crude around,” said Tony Nunan, oil risk manager at Mitsubishi Corporation, referring to the US oil production.
The charts today show that there is a technical support for WTI along the neckline of a head and shoulders pattern, at around $91.90 a barrel.


Brent oil today fell sharply below $107 a barrel as expectations of increased oil supply from the Middle East and North Africa outweighed the large drop in US crude supplies.
Major world powers and Iran continued to move ahead on an interim deal that will ease some sanctions on Tehran in exchange for cuts in its nuclear programme.
“The Iran situation is a bearish factor for Brent. But still a lot can go wrong and Iran could continue to support the market in the long term,” said Nunan.
Technical analysis reveal that Brent “will stay range bound in the near term due to lack of fundamentals,” analysts at Phillip Futures say in a note.
At the moment Brent is trading at $105.76 a barrel after hitting its lowest level since 12 November, at $105.53.
**Natural gas**
Natural gas is currently trading at $4.37 per 1,000 cubic feet after yesterday reaching a 17-day high at $4.42 on forecasts for cold temperatures in the US in the coming days and on speculation that Natural Gas Inventories dropped last week.
The EIA is scheduled to release Natural Gas Inventories at 15.30 UTC and analysts expect a decline by 269 billion cubic feet last week.


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