Oil spot price: WTI and Brent poised for gains this week ahead of US NFP
_iNVEZZ.com: Friday, February 7th:_
The North American oil benchmark, West Texas Intermediate (WTI), has been retracing thus far today and is currently at $97.50 a barrel. Yesterday, the price reached its highest point in a week on the back of stronger-than-expected US economic data, which strengthened the outlook for fuel demand in the world’s largest oil consumer.
WTI is set for a fourth consecutive weekly gain, which will be the longest gaining streak for the past seven months, as cold temperatures in the US boost distillate fuel demand.
US Unemployment Insurance Initial Claims dropped to 331,000 last week from the prior 351,000, the Department of Labor said yesterday. Analysts had expected a fall to 337,000.
Barratt’s Bulletin’s Jonathan Barratt says that “the positioning for the US economy and what the market is perceiving is providing support for oil”. He notes: “The draw in the products is typical for this time of the year where we see inventories start to decline. That should provide some underlying support to the market.”
According to a Bloomberg survey, WTI may decline next week when maintenance in US refineries is scheduled. This will reduce crude oil demand and will bolster stockpiles, the survey says.
According to the US Energy Information Administration, refineries’ operating capacity last week was at 86.1 percent – the lowest rate since October.
The European benchmark, Brent, holds yesterday’s gains and remains above $107 a barrel so far today, poised for a second weekly gain in the past three weeks on speculation that US Change in Non-Farm Payrolls data due later today will add to recent signs of economic improvement.
OptionsXpress market analyst Ben Le Brun says that “the market is playing a bit of wait and see, but in general there is quite a bit of optimism we’ll get good numbers and that is supporting oil”.
Brent prices were supported in the past couple of days as Libya’s oil production decreased after protesters disrupted flows in a pipeline.
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Libya’s output this week moved in the range 450,000 to 500,000 barrels a day, falling from last week’s 600,000, says National Oil Corporation chairman Nuri Berruien.
Natural gas eased further today, dropping for a third consecutive day, despite depleted stockpiles and boosted heating demand.
US Natural Gas Inventories dropped 262 billion cubic feet last week to 1.923 trillion, more than the five-year average decline of 151 billion, according to data from the EIA released yesterday. Analyst had predicted a fall of 270 billion.
CIBC World Markets analyst Mike Tran yesterday said in a research note that it was the third weekly decrease of more than 260 billion cubic feet this winter. “No other winter has had more than one, and there have been only five total draws that large dating back to 1994, when the EIA first began collecting data,” Tran said.
Inventories were 28.8 percent below the same period a year earlier, the widest difference since 26 April.