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Crude Slightly Lower InCorrectional Movement

By ICN.com CommoditiesJan 31, 2013 03:17AM ET
Crude Slightly Lower InCorrectional Movement
By ICN.com   |  Jan 31, 2013 03:17AM ET
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After rising as high as $98.20 on Wednesday amid recovery hopes that fueled optimism about oil demand following the Feds commitment to keep adding economic stimulus, crude slightly distanced itself from the highest in four months in a correctional movement.

Crude is trading as of this writing around the $97.70 a barrel level compared with the opening at $97.94 and with the highest at $98.03 and the lowest at $97.82. On the short term crude finds support at $97.40 then at $96.85 and resistance at $98.30 then at $99.00.

The U.S. Federal Reserve maintained its commitment to massive economic stimulus as expected, yet gains were limited after data showed U.S. growth unexpectedly contracted in the fourth quarter while crude stocks surged to a seasonal record last week.

But after the Feds kept the monthly bond-buying plan and indicated that the recent stall in U.S. economic growth is likely temporary, predicting that the job market will continue to improve even if at a modest pace, sentiment was boosted.

“After many years of fears that the economy is going to crash, it seemed like the worst is behind us. So better news out of China and expectations for recovery in the United States caused risk money to come back”, said Tony Hunan from Mitsubishi.

The U.S. Energy Department showed yesterday that crude inventories increased by 5.9 million barrels last week compared with an expected rise of 2.5 million. Gasoline supplies fell 956,000 barrels, while distillate stockpiles dropped 2.3 million barrels.

Markets are now waiting Friday’s key employment numbers and the official manufacturing report from the world’s largest oil consumers. While the factory activity is expected to improve in China, the jobless rate in the U.S. is expected to stay at 7.8%.

Sentiment was also boosted by a report showing factory output in the world’s third largest economy rose at the fastest pace in a year and a half while firms expect further gains, raising hopes for a stabilizing global demand and export.

Japan’s industrial production rose by 2.5% in December from -1.4% previous. Moreover, economic sentiment improved more than expected in the eurozone in January, helping to brighten the outlook for oil demand even further.

Focus is also turning to the quarterly earnings reports and the geopolitical tensions in the Middle East that still adds upside pressures on oil prices. Israel bombed a convoy near Syria`s border with Lebanon in a warning to Damascus.

Brent is trading as of this writing around the $114.98 after rising 0.07%; natural gas is trading at $3.332 per 1,000 cubic feet after falling 0.09%; gasoline is trading at $3.375 a gallon after falling 0.04%; heating oil is trading at 3.1238 after rising 0.21%.

Markets await later this day the release of the U.S.’s personal income and spending as well as the jobless claims, while Canada will release its GDP report and Germany will release its employment report and the CPI index.
Crude Slightly Lower InCorrectional Movement

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Crude Slightly Lower InCorrectional Movement

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