Crude Falls Toward $94.00 On Supply Outlook

Crude oil fell towards the $94.00 a dollar level amid expectations of more supply from the Middle East and North Africa which outweighed the sharp drop in US crude inventories.

While oil production was resumed from the El Sharara field in Libya, major world powers and Iran continued to move ahead on an interim deal that eases some sanctions on Tehran if Iran curbs its nuclear program which may add to global supply and depress oil prices.

Crude jumped to as high as $94.62 after the Energy Information Administration report showed yesterday that crude inventories fell to the lowest level since March 2012 in the US, the world’s biggest oil consumer, which may prevent prices from falling further today.

Crude inventories slid by 7.66 million barrels to 350.2 million last week. Gasoline stockpiles increased 6.18 million barrels last week while distillate supplies, including heating oil and diesel, declined 1.02 million barrels, said the EIA.

Crude also found support yesterday from the improving global economic outlook after the World Bank raised its global growth forecast; The Bank believes the world economy will expand by 3.2% in 2014 from 2.4% growth seen in 2013.

However, gains may not be sustained due to the supply outlook and believes the Federal Reserve will curb its monetary stimulus program soon since the latest economic data point to an improving US economy.

“People feel more confident about the economy at the moment, and that`s supportive for oil. But the reality is there`s a lot of crude around”, said Tony Nunan from Mitsubishi Corp in Tokyo.

- WTI crude oil futures for February is trading around $ 94.06 a barrel after falling $0.11

- Brent futures for February settlement is trading around $ 106.84 a barrel after falling $0.29

- Natural gas is trading at $ 4.371 per cubic feet after rising 1.06%

- Gasoline is trading at $ 2.619 per cubic feet after falling 0.28%

- Heating oil (diesel) is trading at $ 2.9749 a gallon after falling 0.16%