Crude Oil Tumbles Hard

Crude oil continues to fall this morning trading at 94.42. On Wednesday, crude oil fell 3 percent in the steepest daily drop in five months, as U.S. crude inventories rose to their highest since 1990 and as weak economic data weighed on the outlook for demand. U.S. crude stocks rose last week to the highest level since 1990 even as crude imports fell, government data from the Energy Information Administration reported on yesterday. Crude oil stocks increased by 2.7mn barrels, gasoline stocks fell 572,000 barrels and distillate fuels, which include diesel and heating oil, fell 2.27mn barrels. Crude stocks at NYMEX delivery hub Cushing, Oklahoma, fell 287,000 barrels to 49.18mn barrels. Oil inventory and oil consumption are getting harder and harder to predict based on inventory levels.

Weak job data for ADP non-farm employment change and poor and slowdown in non-manufacturing prices put additional pressure on prices. Traders can expect crude prices to go down as investors would await the job data from US on Friday and unemployment claims today to gauge the health of US labor market and get direction on demand for crude.

Fundamental data this week has been mostly negative in terms of growth and manufacturing. The European Union’s data agency Eurostat said unemployment rose to 12 percent in the euro zone in February, which is negative for crude Oil was pressured Monday after The Institute for Supply Management’s factory index fell to 51.3% in March from 54.2% in February. Economists had expected the index to match February’s reading. Weak output and new orders components pulled the index lower, but a 2.5-point bounce in the new export orders component “is the silver lining in dark clouds, which also is the case for March purchasing managers’ indexes in Japan, China, Taiwan and Korea that keeps hopes of the recovery in the global spending alive.. The ISM figure followed two separate surveys from China released Monday showing manufacturing activity picked up in March. But some economists remained cautious on China’s growth outlook as the activity acceleration in March mainly stemmed from seasonal factors. Eurozone PMI’s all missed their marks this week including the UK with only Germany meeting expectations.

U.S. natural gas ended lower as warmer weather forecasts for next week raised expectations that heating demand was finally poised to slow. Expect prices to go down further as the receding winter season is likely to hurt the demand and pressure prices. Natural gas is trading at 3.913 recovering a few pips from yesterday’s decline. Natural gas inventories are expected to decline by 92-95bn cubic feet, actual data will be released by EIA later in the day.