Oil Moves Confuse Speculators

Oil prices diverged on Friday morning with WTI adding 18 points to 29.72 while Brent oil dipped 8 points to 29.53. U.S. crude and gasoline stockpiles rose more than expected last week, while distillate inventories fell, data from the Energy Information Administration showed on Thursday. Crude inventories rose by 4 million barrels in the last week, compared with analysts’ expectations for an increase of 2.8 million barrels. Crude inventories climbed to the highest level since 1990. The increase came as refiners cut runs, although crude imports fell. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 191,000 barrels, EIA said. Gasoline stocks rose by 4.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.4 million barrels gain. Distillate stockpiles, which include diesel and heating oil, fell by 1.0 million barrels, versus expectations for a 133,000 barrels’ increase, the EIA data showed.

Oil prices rebounded over $1 a barrel from 12-year lows on Thursday, their biggest daily gain this year, as rallying financial markets gave some bearish traders reason to take profits on record short positions. U.S. crude vaulted back toward $30 per barrel as hopes for easier monetary policy from Europe fueled a recovery in stock markets in European and on Wall Street.

Prices did not falter on U.S. data showing a larger-than-expected rise in record high crude and gasoline stockpiles. Instead, the report triggered buying among traders who had feared the figures could be even worse.

Still, few traders expected a quick recovery from this year’s slump of more than 25 percent, amid pressure from a deepening supply glut and signs of economic weakness in China – the world’s No. 2 oil consumer. Thursday’s rally got going after European Central Bank President Mario Draghi said it would be necessary to review the Bank’s monetary policy stance in March, fueling hopes for more quantitative easing.

Bargain hunting at lower levels and hints of more boost by the ECP to prop up growth in the economy and rallying equities will act as a positive factor for oil prices. However, Iran’s return to the oil market this month has added to worries, after the lifting of international sanctions.

On Friday morning as a blizzard covered the US northeast natural gas gained 1 cent to trade at 2.146. U.S. natural gas futures traded within a few cents of unchanged for a third day in a row on Thursday despite a slightly smaller than expected storage draw as the market awaited the arrival of the first major snowstorm of the season on the East Coast. Traders noted forecasts for less cold weather over the next two weeks and on into February and March helped offset an early decline after the storage report.

The U.S. Energy Information Administration said utilities pulled 178 billion cubic feet of gas out of storage to heat homes and businesses during the cold last week, the biggest withdrawal seen since last March. The draw however was a little shy of analysts’ estimate of 184 bcf and compared with a 220-bcf draw during the same week a year ago and a five-year average draw of 177 bcf.