API Inventories Sink Crude Oil Prices

The American Petroleum Inventory numbers dealt a death blow to crude oil late yesterday evening. Crude oil tumbled to almost a dollar to trade at 93.68 on Tuesday and continues its fall this morning. Crude oil towards the end of the Asian session is down 23 cents at 93.45. Crude inventories in the U.S., the world’s biggest oil consumer, increased by 6.9 million barrels last week, the American Petroleum Institute said late yesterday, ahead of a government report expected to show oil supplies in the nation increased.

The Energy Information Administration will probably say oil supplies rose 750,000 barrels last week, according to the median of 11 responses in a Bloomberg survey. Prices slipped Nov. 25 after Iran and world powers reached an interim agreement to restrict the country’s nuclear program in exchange for the easing of some sanctions. Once the official EIA inventory is released markets should be very quiet as most traders leave their offices early the day before the Thanksgiving holiday, which is the biggest travel weekend in the US. Most traders will not return to their offices until Monday. Friday kicks off the holiday shopping season with Black Friday, unfortunately JP Morgan is predicting a lackluster selling season as bad as it was in 2008. Today traders will also look at US durable goods data along with the all-important Michigan Consumer Confidence release.

The Organization of Petroleum Exporting Countries will keep its production quota unchanged at a meeting next week in Vienna, a separate survey shows. This helped Brent oil gain 7 cents in this morning’s session trading at 110.97 with the spread widening almost $18.00. The European benchmark crude was at a premium of $17.50-18.00 to WTI. The spread was $17.20 yesterday, the widest in more than eight months based on closing prices. OPEC, which pumps about 40 percent of the world’s crude, will reaffirm its output target of 30 million barrels a day at next week’s meeting, according to 18 of 20 analysts and traders surveyed by Bloomberg. Two respondents said supply will be cut.

The 12-member group produced 30.62 million barrels a day last month, data compiled by Bloomberg show. That’s up from 30.58 million in September. Brent is unlikely to slide below a range of $95 to $100 a barrel for a full year amid supply risks and actions by OPEC.

Natural gas remains strong at 3.856 and could easily top $4 of the cold front materials as forecast by Accuweather. The National Forecast Center is calling for the coldest winter in many years helping natural gas to climb. Gas eased by 9 points this morning on some light selling to book profits before month end and the US holiday. The official inventory this week has been delayed due to the holiday. Heating oil eased a bit after a strong climb this week to trade at 3.0415 down by 53 points.