Crude oil dropped for a second day as worries over demand from the world’s largest oil consumer is weighing, while U.S. crude inventories are expected to climb to the highest level in more than 22 years.
U.S. Slowdown Fear
The disappointing U.S. factory data on Monday hinted that the economic momentum is waning. The ISM manufacturing fell to 51.3 in March from 54.2 in February while markets expected the sector to grow to 54.0.
This data comes only one day after China’s disappointing manufacturing data. Recovery doubts in the world’s second largest oil consumer were triggered after the manufacturing PMI missed expectations falling to 50.9 in March.
Meanwhile, crude oil inventories in the U.S. are expected to have climbed 2.3 million barrels last week to the highest level in more than 22 years, according to the EIA report tomorrow. The API is scheduled to release a separate inventory data today.
- Crude oil is trading around the $96.78 a barrel level compared with the opening at $96.96, while the highest is at $97.02 and the lowest is at $96.60
- Brent is trading around $110.89 a barrel after falling 0.17% or $0.19
Exxon Mobile’s (XOM) Pegasus pipeline, used to supply U.S. Gulf Coast refineries, continues to be closed after a leak was discovered in Arkansas on March 29. Exxon continues to clean up the spill, which may cap losses.
Saudi Arabia’s Oil Minister Ali-Naimi said on Monday that he expects a recovery in oil demand from Asia. China imported 1.08 million barrels a day of crude from Saudi Arabia in 2012, up more than 7% from the previous years.
Italy Watch
Markets will continue to monitor the political developments in Italy and the financial woes in Cyprus, as later this week the U.S. will release its jobs report and Bank of Japan, Bank of England and the European Central Bank will release their monetary policy decisions.
- Natural gas is trading at $4.015 per cubic feet after falling 0.01%
- Heating oil is trading at $3.0788 a gallon after rising 0.33%
- Gasoline is trading at $3.0929 a gallon after falling 0.28%
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