Crude Range Bounded Ahead Of US Jobs Data; Stimulus Cutback Bets Mount

The rising caution ahead of the US non-farm payrolls report later in the day overshadowed the bigger-than-expected rebound in China’s exports that added to a run of indicators suggesting the economy of the world’s second largest oil consumer has found its footing.

Yet, crude failed to advance after the US gross domestic product growth accelerated in the third quarter by 2.8% annual rate, the quickest pace in a year, adding to signs the US economic recovery may be sustained fueling fears of early Fed stimulus cutback.

Therefore, investors will be closely watching the outcome of today’s jobs report to see if that would give the Fed further reason to taper its $85 billion in monthly bond purchases sooner rather than later, which may keep oil range bounded until later in the day.

An early tapering of the US monetary stimulus would reduce the dollar supply in the market and make dollar-denominated assets such as oil more expensive for holders of other currencies, adding downside pressures on commodities.

- WTI crude oil futures for December is trading around $ 94.45 a barrel after rising $0.25

- Brent futures for December settlement is trading around $ 103.20 a barrel after falling $0.26

Adding some downside pressures on crude is the stronger dollar which found support t from a surprise interest rate cut by the European Central Bank, and the steady progress in talks between Iran and the West over Tehran`s disputed nuclear program.

On the other hand, crude finds some support from more civil unrest in Libya, as more fighting broke out in the capital Tripoli on Thursday, and the prospects of rising demand on fuel and heating oil with the start of winter in the US and Europe.

US demand for gasoline increased by the fastest rate since July as stockpiles shrank for a fourth week by 3.76 million barrels according to the US EIA report released on Wednesday, while distillates, including diesel and heating oil, fell by 4.9 million barrels.

- Natural gas is trading at $ 3.520 per cubic feet after rising 0.01%

- Gasoline is trading at $ 2.5034 per cubic feet after rising 0.01%

- Heating oil (diesel) is trading at $ 2.8389 a gallon after falling 0.01%