Crude Flat With A Tendency To Drop Amid Taper Worries

Crude oil is trading almost flat on Thursday amid heightened expectations the US Federal Reserve will start tapering its stimulus program during their meeting next week, which could lower demand on from the largest oil consumer.

These expectations have increased recently not just because of the strong economic data that have improved the outlook for the country’s economic growth but also after lawmakers reached a bipartisan budget deal on Tuesday.

“Passing of the budget would give the Fed one last reason to exit the stimulus program. Expectations are creating a weaker sentiment for oil and other commodities”, said Chee Tat Tan from Phillip Futures in Singapore.

Also weighing on prices was the Energy Information Administration report yesterday, which showed that gasoline and diesel inventories rose about three times as much as estimated last week, which was seen as weak domestic demand ahead of the holiday season.

Gasoline stockpiles jumped 6.72 million barrels to 219.1 million barrels. Demand for the motor fuel slid to 8.35 million barrels a day last week, falling for the fifth consecutive time. As for distillates, including diesel and heating oil, increased 4.54 million to 118.1 million.

As for crude stockpiles, they fell 10.6 million barrels to 375.2 million, but this was seen as a move by refiners to avoid taxes instead of a sign of strong demand.

While investors will keep an eye today on the US weekly jobless claims report later in the day for signs of continued recovery, comments from Libyan officials that three oil ports could reopen this weekend may also weigh on oil prices.

- WTI crude oil futures for January is trading around $ 97.37 a barrel after falling $0.07

- Brent futures for January settlement is trading around $ 109.71 a barrel after rising $0.01

- Natural gas is trading at $ 4.365 per cubic feet after rising 0.65%

- Gasoline is trading at $ 2.664 per cubic feet after rising 0.11%

- Heating oil (diesel) is trading at $ 3.0216 a gallon after rising 0.01%