Crude is range bound this morning.
Crude Inventories increased more than expected. A build of 7.2 million barrels was recorded; 2.9 million more than expected.
According to market survey, crude oil stocks are expected to rise by 3Mbbl. Gasoline stocks can increase by 1.3Mbbl, whereas distillates stocks can decline by 1.2Mbbl.
OPEC’s 11 members bound by output targets pumped 26.23 million barrels a day of oil in January, down from 27.24 million in December but above their target of 24.84 million.
The National Association of Realtors reported that the number of new sales contracts on existing homes in US jumped a seasonally adjusted 6.3% in December, against the drop of 4.0% in November.
According to Bloomberg News shorts are covering despite anticipated lower crude prices on slowing economic woes:
If you enjoy the content at iBankCoin, please follow us on TwitterCrude oil rose in New York as traders bought contracts to close out bets that prices would decline amid the global economic recession.
Market participants who held short positions, or bets that prices would fall, are purchasing futures after oil for March delivery dropped 23 percent over the preceding 10 trading days. U.S. crude oil inventories probably increased for the 15th time in the past 17 weeks, a Bloomberg survey showed.
“What we’re seeing is a bit of short-covering,” said Clarence Chu, a trader at options dealer Hudson Capital Energy in Singapore. “I don’t expect this to be any other than a short-term rally, a bit of a dead-cat bounce. Without any new news it will be short-lived.”
Crude oil for March delivery rose as much as 66 cents, or 1.6 percent, to $41.50 a barrel in electronic trading on the New York Mercantile Exchange. It was at $41.16 a barrel at 12:06 p.m. Singapore time. Futures are down 54 percent from a year ago. Prices dropped 4.1 percent to $40.84 a barrel yesterday.
The February contract expired yesterday and rose $2.23, or 6.1 percent, to $38.74 a barrel, the biggest gain since Dec. 31. Sales volume in the contract was less than March as traders avoided taking supplies at the Cushing, Oklahoma, delivery point for Nymex futures.
Crude oil stockpiles at Cushing, where West Texas Intermediate traded on the Nymex is stored, climbed 2.5 percent to 33 million barrels during the week of Jan. 9, the Energy Department said last week. It was the highest since at least April 2004, when the department began keeping records for the location. Total capacity there is 47.7 million barrels, according to data from Lipow Oil Associates LLC.
Inventories Gain
“With the Cushing storage being essentially full, that will exert downward pressure on the March contract,” Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore, said in a Bloomberg Television interview.
U.S. crude inventories probably rose 1.5 million barrels last week, according to the median of analyst estimates in a Bloomberg News survey. The Energy Department is scheduled to release its weekly inventory report on Jan. 22, a day later than usual because of the Jan. 19 Martin Luther King Jr. holiday.
Gasoline stockpiles increased 2.25 million barrels from 213.5 million, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, probably declined 1 million barrels from 144.2 million.
“Against this background of weakness in consumption my guess is that inventories should be up,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “The contango will also provide incentive to store.”
The March contract is trading at a $12.80 a barrel discount to the December future. The situation where later-dated supplies are more expensive than prompt ones is known as contango.
Crises Resolved
Two geopolitical crises that bolstered prices earlier this month appear to have been resolved since Jan. 16.
Russia and Ukraine signed 10-year natural-gas contracts, ending a dispute that squeezed supplies to the European Union for almost two weeks. Shipments resumed yesterday. More than 20 European countries were affected, as 80 percent of Russian gas exports pass through Ukraine’s pipeline network.
Israel began pulling its troops from the Gaza Strip after it declared a unilateral truce Jan. 18, ending a military operation to stop Hamas and other Palestinian militant groups from shooting rockets into the country. The fighting began on Dec. 27.
Brent crude oil for March settlement was at $43.79 a barrel, up 17 cents, on London’s ICE Futures Europe exchange at 12:14 p.m. Singapore time. It declined 88 cents, or 2 percent, to end the session at $43.62 a barrel yesterday.
