Crude Oil Holds At 92-93 Ahead Of EIA Inventory

This morning crude oil is trading at 92.76 recovering 24 cents after tumbling on Tuesday afternoon. Crude oil fell on Tuesday, as uncertainty over a bailout for Cyprus intensified concerns about the euro zone debt crisis, and energy demand if the economic picture darkens. The proposal announced over the weekend shattered calm in the euro zone and caused global markets and the euro to tumble.

Iran also presented an element of risk that could cap losses in oil markets regardless of the outcome of the vote in Cyprus. Europe and the United States last year imposed tough new sanctions aimed at Iran’s oil trade to force Tehran to the negotiating table over its nuclear programme. Insurers have refused to cover Indian refineries that process Iranian crude imports due to Western sanctions in a move that could halt deliveries, raising concerns other Asian buyers may face a similar snag. Investors looked ahead to the weekly release of U.S. oil inventories data today. A further fall in crude stocks at oil futures delivery hub Cushing, Oklahoma, could strengthen West Texas Intermediate (WTI) prices against Brent. U.S. commercial crude stockpiles were expected to have risen 2 million barrels last week on low refinery runs, a preliminary Reuter’s poll of analysts showed on Monday. Yesterday’s release of the American Petroleum Association showed a drop in crude oil inventories. In their weekly report the API said that U.S. API Weekly Crude Stock fell to a seasonally adjusted annual rate of -0.41M, from -1.38M in the preceding month. Analysts had expected U.S. API Weekly Crude Stock to rise 1.95M last month. Crude-oil supplies fell unexpectedly for the week ended March 8, according to data from the American Petroleum Institute issued late Tuesday. Crude supplies declined by 1.4 million barrels. Gasoline inventories also fell by 3.1 million barrels, while distillate stockpiles lost 2.2 million barrels, the trade group said. The API data come ahead of the more closely watched U.S. Energy Information Administration report due this afternoon.

 A look at Middle East fundamentals yesterday this week gave a lot of input into the prices of crude oil. OPEC members must prepare for a big increase in oil supplies in the second half of the decade, as well as heightened competition from natural gas in some of their core markets, and further erosion in demand as conservation and efficiency measures bite harder were the highlights of a report released yesterday in regards to the future demand of crude oil by a respected energy organization.

Fast-growing oil exporter Iraq is selling its crude cheaper than any comparable supply, undercutting regional rival Saudi Arabia to grab a bigger slice of the Asian market. OPEC member Angola is due to export around 1.83 million barrels per day (bpd) of crude oil in May, up from the previous month and the highest since last August, a provisional loading program showed on Monday.

Natural gas ended higher as lower temperatures boosted the demand and supported prices. Natural gas is expected to move in a range as receding winter season and profit booking at such high levels can keep prices in range and investors would also await the inventory data. Gas continues its climb as storms are hitting many major areas in the US at this time, pushing natural gas up 10 points this morning to trade at 3.971.