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U.S. oil falls to 5-month low ahead of data; WTI-Brent spread hits USD18

Published 11/27/2013, 08:21 AM
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Investing.com - U.S. oil futures fell to a five-month low on Wednesday, as traders looked ahead to key U.S. economic reports as well as data from the U.S. government on oil and fuel supplies later in the day.

On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD92.62 a barrel during U.S. morning trade, down 1.15%.

New York-traded oil futures fell to a session low of USD92.53 a barrel earlier, the lowest since June 3. The January contract settled 0.44% lower at USD93.68 a barrel on Tuesday.

Oil futures were likely to find support at USD91.37 a barrel, the low from June 3 and resistance at USD94.69 a barrel, the high from November 26.

Wednesday’s government report was expected to show that crude oil stockpiles rose by 600,000 barrels last week, while gasoline inventories were forecast to increase by 260,000 barrels.

After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 6.9 million barrels in the week ended November 22, while gasoline stockpiles increased 200,000 barrels.

U.S. crude prices have been on a downward trend in recent weeks amid concerns over rising U.S. inventories and increased production levels.

Total U.S. crude oil inventories stood at 388.5 million barrels as of last week, the highest since June. Domestic output was little changed at 7.98 million barrels a day, the highest in 24 years.

Investors also looked ahead to the release of key U.S. economic data later in the day to further gauge the strength of the economy and the need for stimulus.

The U.S. was to release data on durable goods orders as well as a report on manufacturing activity in the Chicago region and revised data on consumer sentiment later in the session.

In addition, the Labor Department was to release the weekly report on initial jobless claims one day ahead of schedule due to Thursday’s Thanksgiving holiday.

Meanwhile, on the ICE Futures Exchange in London, Brent oil futures for January delivery inched up 0.4% to trade at USD111.31 a barrel. The spread between the Brent and U.S. crude contracts stood at USD18.69 a barrel, the widest since March.

Oil traders remained skeptical about how quickly Iran can ramp up production and increase its exports following a diplomatic deal reached between Western powers and Tehran.

Trade sanctions slapped on Iran due to its alleged nuclear ambitions have taken out more than 1 million barrels of oil per day from the global market over the past two years.

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