Crude Hit By Taper Worries, China PMI, And Iran Deal Hopes

Crude oil fell on Thursday after the minutes from the Federal Open Market Committee`s October meeting released yesterday showed the officials felt they could decide to start scaling back the stimulus at one of its next few meetings.

The market interpreted these comments as if tapering will happen in a month or two, especially if economic conditions improve, pushing the dollar higher and adding downside pressures on the dollar-dominated commodities including oil.

Also weighing on prices is the meeting between world powers and Iran. Reports show a preliminary deal over Tehran’s nuclear program was reached. Such a deal may involve easing sanctions that could lead to a rise in its crude exports.

“The combination of factors should keep oil in a tight trading range until clear details are available on when the Fed will rollback its stimulus or geopolitical tensions in the Middle East worsen”, said Victor Shum from IHS Energy Insight.

- WTI crude oil futures for January is trading around $ 93.58 a barrel after falling $0.27

- Brent futures for January settlement is trading around $ 107.73 a barrel after falling $0.33

Adding to the downside pressures on oil prices was China’s flash manufacturing PMI for November which fell to 50.4 from a seven-month high of 50.9 in October, sparking doubts about the sustainability of economic recovery in the world’s second largest oil consumer.

Crude inventories rose for a ninth week in the world’s biggest oil consumer. Data from the US Energy Information Administration showed that crude stockpiles climbed last week by 375,000 barrels to 388.5 million, the highest level since June.

Meanwhile, gasoline inventories slid by 345,000 barrels last week compared with an expected fall of 300,000 barrels, and distillates, including heating oil and diesel, dropped by 4.8 million barrels, compared with a predicted 280,000 barrel decrease.

- Natural gas is trading at $ 3.683 per cubic feet after rising 0.24%

- Gasoline is trading at $ 2.66 per cubic feet after falling 0.11%

- Heating oil (diesel) is trading at $ 2.9513 a gallon after falling 0.11%