Brent – WTI Crude Oil Spread Widens Finally

Oil finally eased, falling to trade at 103.72 and continues in the red on Thursday morning. WTI crude traded near the lowest level in almost 2 weeks as signs that the U.S. will taper economic stimulus sometime this year raised speculation oil demand may falter in the world’s biggest consumer. Also news that Libya will once against start exporting oil with protests and clashes almost resolved. Nymex crude oil prices declined by more than 1 percent the back of statement from US Federal Reserve Chairman Ben and its members that QE tapering program will start economy improves. Further, strength in the DX exerted downside pressure on prices However; sharp downside in prices was cushioned as a result of decline in US crude oil inventories.

The US Energy Department (EIA) report showed that US crude oil inventories declined more than expected by 1.4 million barrels to 359.10 million barrels for the week ending on 16th August 2013. Gasoline stocks dropped sharply by 4.0 million barrels to 218.40 million barrels and whereas distillate stockpiles shoot up by 0.9 million barrels to 129.40 million barrels for the last week.

Libya’s Marsa al Brega port, which local sources said reopened on Tuesday, may handle oil cargoes in the next few days, a shipping source close to the trade said. News that Syria is now using gas on its citizen has caught the attention of global leaders which is turning up tensions between the world and Syria which could spark a confrontation or global intervention.

The Brent-WTI crude oil spread widened to more than $6 a barrel for the first time since June on Wednesday on signs that companies are actively diverting oil to Cushing, Oklahoma, for the first time in 12 months.

US Dollar Index increased by 0.46 percent in the yesterday’s trading session as the US Federal Reserve policy meeting Minutes showed that the officials support tapering stimulus this year if US economy improves. Further, rise in risk aversion in the global markets increased the demand for safe haven. The dollar continues to climb this morning to trade at 81.52 weighing on US dollar denominated commodities, such as crude oil and gas.

Natural gas is trading at 3.474 a bit on in the green this morning. Natural gas futures, supported by hot weather in the Northeast and Midwest this week, ended slightly higher on Wednesday, but some technical selling and expectations for another bearish inventory report helped limit the upside. U.S. natural gas inventories should end the stock building season this year higher than initially expected after mild late summer weather slowed demand, according to a new Reuter’s poll of energy analysts. The US Energy Information Administration (EIA) is scheduled to release its weekly inventories later today and US natural gas inventory are expected to increase by 68 billion cubic feet (bcf) for the week ending on 16th August 2013