Crude Holds To Gains After EIA Report Awaiting ECB Meeting, China Trade

After falling to the lowest of $95.03 on Wednesday hurt by a stronger dollar and rise in crude stockpiles, crude recovers losses incurred and is now seen steady in a tight range around $96.70.

Crude is trading - as of this writing around $96.72 a barrel level compared with the opening at $96.79 and with the highest at $96.87 and the lowest at $96.67. On the short term crude finds support at $96.50 then at $96.00 and resistance at $97.00 then at $97.30.

Oil dropped Wednesday as data released by the American Petroleum Institute showed U.S. stockpiles of crude rose by 3.6 million barrels last week; meanwhile, the stronger dollar also weighed on oil prices by making crude more expensive.

However, later in the day a governmental report showed a smaller-than-expected increase in U.S. crude stockpiles, pushing prices up again. Crude supplies grew by 2.62 million barrels last week, from an expected increase of 2.65 million barrels.

The U.S. Energy Department`s Energy Information Administration ( EIA ) showed that gasoline supplies rose 1.74 million barrels and distillates slid by 1.04 million, adding that gasoline demand rose nearly 5% during the past four weeks.

Stockpiles at Cushing , site of the biggest U.S. storage hub, dropped 315,000 barrels last week to 51.4 million barrels, the lowest since the week ended January, showing that demand is supportive, especially on gasoline, which is getting more expensive by the day.

Oil however, may struggle today to sustain the gains as traders await the outcome of the European Central Bank meeting and China’s trade data for clues on the health of the global economy and what it may mean for oil demand.

The European Central Bank is expected to hold interest rates steady, yet comments on the outlook for the troubled region`s economy, especially amid leadership changes in Spain and Italy, and the impact of the euro`s recent strength will be closely monitored.

Oil prices found support in recent weeks from positive economic data release by the world’s largest oil consumers, signaling that the global economy has turned a corner, while the rising tensions in the Middle East triggered supply concerns.

“The markets have pretty much built in the fact that the worst is over for now, and I think we`re close to the top. Geo-political tensions will keep the heat under the market, but the market is fundamentally over-supplied”, said Tony Hunan from Mitsubishi, Tokyo.

Although the tensions over the Middle East have eased this week amid believes Iran and the U.S. will hold direct talks on the nuclear program on February 25-26, Tunisia’s new crisis triggered fresh worries over supply.

Tunisia – which is located between major oil producers Algeria and Libya, dissolved the government to calm street riots. Meanwhile, Syria’s struggle to end the civil war and Egypt’s violent protests continues.

Brent is trading as of this writing around the $116.84 after rising 0.09%; natural gas is trading at $3.445 per 1,000 cubic feet after rising 0.79%; gasoline is trading at $3.0577 a gallon after rising 0.59%; heating oil is trading at 3.1867 after rising 0.03%.