Oil Trading Near Recent Low As Natural Gas Tumbles

US production continues to climb while global demand tumbles as per a report on Thursday from the Energy Administration. WTI crude oil is trading at 92.47 recovering 81 cents this morning as the US dollar eased after touching a recent record high on Thursday. Crude oil rose in early Asian trading on, recovering from a six week-low in the previous session when a large build in crude stockpiles at the contract’s delivery point in Cushing, Oklahoma, weighed on the market Brent oil remains weak but recovered 23 cents this morning to trade at 106.72 after topping the 108 price level on Thursday morning. The spread continues to widen to $14.00. US crude oil moved lower on Thursday as higher inventory stocks along with drop in demand from US.

Saudi Arabia produced 9.819 million barrels per day (bpd) of crude oil in December, up from 9.745 million bpd in November. The first crude oil export from Libya’s western port of Zawiya is expected to load around Jan. 10-12 following the restart of production from the El Sharara oilfield at the weekend. The North Sea’s Buzzard oilfield is restarting after a brief production outage on Wednesday. Crude oil prices are expected to remain in a range to down for the day as investors would be keen to wait US Non-farm payroll data and restart of oil fields over the weekend.

Iran has set the official selling price (OSP) of its Iranian Light grade for Asian buyers at $2.66 above the Oman/Dubai average for February, down $1.30 from a month ago, two industry sources with direct knowledge of the matter said on Friday. This morning’s release of Chinese trade balance data gave a mixed view into the current economic situation. China’s crude oil imports rose 13 percent in December from a year ago to a record 6.31 million barrels per day as two big refineries reopened, but growth for 2013 was sharply down as demand cooled in the world’s second-biggest oil consumer. The flow of oil through a new pipeline to Turkey from Iraq’s Kurdish region is a boon for the small oil companies that took a risk to explore there, who at last see the chance to earn steady export income from their investments despite the strong objections of the government in Baghdad.

Heating oil continued to climb adding 3 points today to trade at 2.9263 as the cold continues across the US. Reports that the weather will warm from its record lows pushed natural gas to a plummet on Thursday and this morning. Natural gas tumbled from 4.33 to trade this morning at 4.011 giving up 30 cents in just two days. U.S. natural gas futures fell by 5 percent on Thursday, on the promise of defrost in regions held in an arctic grip this week. The latest weather models forecast temperatures to be higher than previously predicted. Front-month February gas futures on the New York Mercantile Exchange fell 21 cents, or 5 percent. Thursday’s natural gas inventory showed that gas companies pulled 157 billion cubic feet from storage to meet demand in the week ended Dec. 3, the Energy Information Administration reported. That was in line with the average of forecasts from 13 traders and analysts surveyed by The Wall Street Journal. The drop was greater than the five-year average decline for the week of 131 bcf, but less than the 191-bcf drop recorded a year earlier. Gas inventory, at 2.817 trillion cubic feet, stands at the lowest level for this time of year since 2008, EIA data show. Storage levels are 15.8% below the extraordinarily high year-earlier level and 10.1% below the five-year average for the week.