EIA Inventories & Reports Weigh on Crude Oil and Natural Gas

Positive data is helping crude oil to recover from its steep losses this week. Crude oil is trading at 94.19 adding 42 cents in the Asian session. Brent oil is up 34 cents to trade at 108.47 after falling to the 105 price level this week. Chinese data along with comments from Federal Reserve nominate Janet Yellen are helping markets this morning.  Chinese data over the past days have shown that industrial production surprisingly expanded by 10.3% last month, defying analysts’ projections that factory output growth will decelerate to 10.0% after it jumped 10.2% a month earlier.

Also fanning positive sentiment, China’s General Administration of Customs said on Friday the Asian nation’s exports rebounded above expectations in October after declining in September. Stronger global demand sent overseas shipments soaring by 5.6% last month, exceeding analysts’ projections for a surge of 3.2% from the previous month’s 0.3% decline. West Texas Intermediate traded near a five month low on signs of expanding supplies, while Brent advanced amid disruptions in Libya, widening the spread between the two crudes to the most since April.

Crude oil saw little action after the industry-funded American Petroleum Institute said earlier in the week that crude supplies increased by 599,000 barrels last week. EIA inventories at Cushing gained 1.69 million barrels to 38.2 million last week, the highest level since Aug. 9, and the Energy Department’s statistical arm, said. Stockpiles at the hub have increased 5.58 million barrels in the past five weeks. Total U.S. supplies jumped 2.64 million barrels last week; more than triple the 800,000-barrel average estimate by analysts in a Bloomberg survey. Crude oil should have fallen on the data but Janet Yellen’s support for ongoing stimulus and the lowered the likelihood that the Fed would begin tapering in December helped crude move past the higher inventory numbers. .S. crude output climbed to 7.98 million barrels a day last week, the most since January 1989. Horizontal drilling and hydraulic fracturing, or fracking, have unlocked supplies in shale formations in North Dakota, Texas and other states. Production exceeded U.S. imports in October for the first month since February 1995, the EIA said yesterday in a monthly report. For the first month in nearly two decades, the U.S. in October extracted more oil from the ground than it imported from abroad, marking an important milestone for a nation seeking to wean itself off foreign oil.

Natural gas declined by 4 points after trading above the 3.60 range on hopes that colder weather would drive up residential heating demands. Natural gas was last trading up by 1 percent to $3.60/mmbtu after the Energy Information Administration reported that operators injected 20 billion cubic feet into storage last week, within the range of analyst estimates. he number of heating degree days, a measure of weather related demand for gas based on population, totaled 103 in the week ended Nov. 7, 7 percent below the 30-year norm of 111 for the period and 18 percent lower than last year’s count of 125. A blast of cold in the eastern U.S. this week will moderate over the next five days before below-normal temperatures again sweep across the East Coast and into Midwest from Nov. 19 through Nov. 28, said Accuweather.