Crude Oil Trapped Between $98.50 And $99.00 Due To Thin Volumes

Crude oil is trapped on the first trading day of 2014 between the $98.50 and $99.00 a barrel level due to thinner-than-usual volumes because of the holiday period, yet the drop in US inventories and output cuts in Libya and South Sudan provide support.

Data from the American Petroleum Institute showed on Tuesday a drop of 5.67 million barrels in US crude stockpiles, nearly double the 3-million-barrel drop expected. The Energy Information Administration will release its data on January 3 due to the holiday.

The EIA data may show crude probably decreased by 2.83 million barrels to 364.7 million last week, while gasoline stockpiles probably rose 1.38 million barrels to 221.2 million and distillates, including diesel and heating fuel, probably rose 750,000 barrels to 114.9 million.

In Libya, oil output is still less than 250,000 barrels per day as ports in the eastern part of the country remain shut, while in South Sudan President Salva Kiir declared a state of emergency in two states on Wednesday after more than two weeks of violence.

However, the weaker-than-expected Chinese data may hold back further gains. Factory activity in the second largest oil consumer expanded at the slowest pace in three months in December, yet the reading was above 50 indicating business activity is still expanding.

Meanwhile, an Iranian official was quoted as saying that Iran and six world powers will implement an agreement in late January obliging Tehran to suspend most of its nuclear activities, which could lead to higher Iranian oil exports, and this will weigh on prices.

- WTI crude oil futures for February is trading around $ 98.89 a barrel after rising $0.47

- Brent futures for February settlement is trading around $ 111.30 a barrel after rising $0.50

- Natural gas is trading at $ 4.239 per cubic feet after rising 0.21%

- Gasoline is trading at $ 2.7952 per cubic feet after rising 0.33%

- Heating oil (diesel) is trading at $ 3.068 a gallon after rising 0.09%