Crude Oil Tumbles While Natural Gas Skyrockets

Crude oil futures closed below $93 per barrel suffer a loss of nearly 5% for the week, after a disappointing report on US jobs provoked concerns that energy demand could weaken.  Crude oil has regained 12 cents on Monday morning as traders took advantage of the weak US dollar and depressed prices to buy crude oil off the bottom.

Brent crude oil fell to an 8-month low below $104 per barrel in heavy trading on Friday and capping off the biggest weekly drop since June, as a weak US jobs report raised doubts about the economy of the world’s largest oil consumer.

The global crude oil market is well supplied and balanced, OPEC member Algeria’s Energy and Mines Minister Youcef Yousfi was quoted as saying on Sunday, ahead of an OPEC meeting next month to set output policy. Saudi Arabia, the world’s top crude exporter, will supply full contracted volumes of crude oil to at least one Asian term buyer in May, unchanged from April, an industry source familiar with the matter said this morning.

Iran’s April crude exports will rebound to above 1 million barrels per day (bpd), industry sources said on Friday, after falling in March to the lowest level seen since the West imposed sanctions to reduce the oil flow in 2012.

Fundamental data this past week shows that the global supply and inventories are high and demands are down, weighing heavily on the commodity. Crude oil is expected to remain close to its current range and could ease if there is an easing of tensions between North and South Korea, which is expected now that China has condemned North Korea’s rhetoric. A well supplied and balanced global crude oil market and inventories at 22 year high also continued to push prices down.

Chinese data will also weigh heavily on the demand for crude, tomorrow China will release its all-important monthly data, including CPI and PPI, and these price reports will grab market attention in the early morning hours of Tuesday.

Natural gas closed up sharply on Friday, with the front-month contract driven to a 20-month high by bullish weekly storage data and stronger price expectations this year, after a chilly winter helped whittle down record high inventories. The gas-directed drilling rig count fell this week for the fifth time in 6-weeks, dropping by 14 to a 14-year low of 375, as per data from Baker Hughes. Natural gas is trading at 4.162 as traders are hoping that monetary stimulus in Japan will increase its imports of natural gas, while Japan waits approval from the US government to extend its imports from the US.