Strong US Data Helps Crude Oil Recover

This morning crude oil is flat at 92.65 after falling on Tuesday as investors weighed the implications of political uncertainty in Italy, the latest assessment of the economy from the head of the Federal Reserve and prospects for growing US crude supplies. Stock and commodities markets were initially rattled by the possibility of political paralysis in Italy after nearly complete results in crucial national elections showed no clear front-runner. Investors worried that the uncertainty could intensify Europe’s debt crisis. Mr. Bernanke’s testimony pushed gold upwards and the US dollar weakened but its decline was limited by strong eco data with housing and consumer confidence reporting well above forecast helping crude regain some of its earlier losses.

U.S. stock indexes rose, reversing a sharp decline on Monday. In data due today, the U.S. Energy Information Administration is expected to show crude-oil stockpiles rose 2.5 million barrels last week, according to a preliminary survey of analysts conducted by Dow Jones Newswires.

Inventories are already at their highest level for this time of year based on EIA data beginning in 1982. The American Petroleum Institute, an industry group, said in its own report late Tuesday oil stockpiles rose by 904,000 barrels. Gasoline stockpiles fell by 1.444 million barrels and stocks of distillate fell by 1.743 million barrels. US crude oil futures fell to mark the lowest settlement of 2013, pressured as Italy’s inconclusive election results and poor energy demand outlook

Markets are closely watching and waiting for comments from US lawmakers as the deadline date for “sequestered” budget cuts is just 48 hours away. Lawmakers seem to be making no headway as government agencies prepare for harsh budget cuts.

Global fundamentals effecting the crude oil markets included news that Japan’s customs-cleared crude oil imports from Iran halved in January from a year earlier to the lowest in three months, Ministry of Finance data showed on Wednesday, as Western sanctions hampered shipments from the Middle East nation. African crude exports to the United States could slip to a trickle this year as the world’s top oil consumer enjoys a shale oil boom, allowing China, often now the buyer of last resort, to become ever choosier. Russia’s fifth-largest crude producer Gazprom Neft has signed a deal to enter an oil project in Iraq’s autonomous region of Kurdistan, a company official said, despite tension between local authorities and central government.

Natural gas fluctuated near its 2-week highs on NYMEX, amid forecasts of below-normal temperatures that would increase heating-fuel consumption. Natural gas gained 15 pips to trade at 3.464. U.S. natural gas futures ended lower yesterday as the receding winter season raised concerns about the overall high inventories of natural gas. Natural gas prices are likely to move in a range as cold weather forecasts for next few weeks can boost heating demand and support prices.