Crude oil Tumbles As Speculators Take Profits

Crude oil is trading at 104.93 taking a major tumble yesterday and continuing in the Asian session this morning. The commodity is down by 46 cents this morning. Crude oil fell on Wednesday as weak manufacturing data from China, the world’s No. 2 oil consumer, prompted investors to take profits after several days of gains. Losses were limited by a better than expected PMI report from the eurozone. Germany and France both reported data exceeding expectations and above the 50 mark pulling the combined EU report to exceed 50 also.

WTI crude oil futures settled down 1.72% at $105.39 per barrel. Front-month Brent futures was down by 1.13% to settle at $107.19 a barrel. American Petroleum Institute aided prices on Wednesday. Continued geopolitical tensions in the Middle East region also supported prices and capped the downside. The dollar maintained a gain from yesterday against its major peers before data on U.S. employment and manufacturing that may influence market expectations for when the Federal Reserve will pare back its stimulus measures.

Activity in China’s manufacturing sector slowed to an 11-month low in July as new orders faltered and the job market darkened. U.S. Energy Information Administration data showed U.S. crude inventories fell again last week, dropping 2.8 million barrels. Crude oil inventories fell for the fourth consecutive week, falling by 2.8mn barrels to 364.2mn barrels, supplies of motor grade gasoline fell by 1.4mn barrels to 222.7mn barrels and supplies of distillate fuels, which includes heating oil, declined by 1.2mn barrels to 126.5mn barrels.

The African Union has asked Sudan to extend a deadline to halt oil flows to South Sudan, in an effort to keep oil exports flowing. Sudan said last month it would close two oil pipelines with South Sudan by Aug. 7 unless Juba stopped supporting rebels across their shared border. South Sudan denies the allegations.

Today markets could be impacted by the release of reports on weekly jobless claims and durable goods orders in the US session.

Natural gas ended lower on Wednesday after a seesaw session, pressured by fairly mild weather forecasts for the next two weeks that should slow demand. Gas regained a bit of momentum this morning to trade at 3.713 as traders wait for the weekly EIA inventory due during the US session. The U.S. Energy Information administration said it had upwardly revised working natural gas storage capacity by about 2 percent in the Lower 48 U.S. states between November 2011 and November 2012. U.S. natural gas inventories on average are expected to have gained 46 billion cubic feet last week, a Reuter’s poll of industry traders and analysts showed.