Crude Volatile With Focus On Cyprus; Inventories Seen Rising

Crude oil edged up on Tuesday on strong U.S. employment data, but today prices slightly fell as concerns over the Cyprus bailout, while U.S. crude inventories are expected to rise the most since June.

Investors are closely following the developments in the eurozone following the controversial Cyprus bailout deal. European policy makers urged Cyprus to let smaller savers escape a levy on bank deposits, before a parliamentary vote on Tuesday.

A report later today from the American Petroleum Institute (API) may show U.S. crude inventories rose for a ninth week, the most since June and the longest run of increases since May. Crude inventories probably climbed by 2 million barrels.

- Crude oil is trading around the $93.66 a barrel level compared with the opening at $93.87, while the highest is at $93.90 and the lowest is at $93.66

- Brent is trading around $109.29 a barrel after falling 0.20%

Also weighing on crude prices today is the strengthening U.S. dollar which trades around the 82.72 since demand on safe haven is rising. Oil prices tend to move inversely against the dollar, as it reduces the appeal of the dollar dominated commodities.

However, losses might be limited as the string of positive data from the United States continued. Yesterday's government data showed that “almost all U.S. states began 2013 with lower unemployment rates than they had at the start of 2012”.

Support to prices is also given by a report from environmental researchers, which showed the number of Atlantic storms similar to Hurricane Katrina could rise sharply this century. The U.S. Senate inched closer to passage of a bill to fund federal agencies.

Meanwhile, the Libyan Waha Oil Co. pipeline continues to be closed. Armed clashes broke out on Monda,y following a weeklong strike by fuel-truck drivers who have been blocking the site entrance. Output was cut by 120,000 barrels a day.

Volatility will persist this week, as markets will be put on edge by President Barack Obama`s visit to Israel and Palestine this week, during which he will discuss the Iranian nuclear program, the crisis in Syria and diplomatic relations with Palestine.

Moreover, investors are waiting for the key U.S. Federal Open Market Committee meeting on Wednesday. Today's data includes U.K. CPI and retail sales as well as Germany’s confidence data. US housing data and the Cypriot Parliament vote will be in focus.

- Natural gas is trading at $3.889 per cubic feet after rising 0.18%

- Heating oil is trading at $2.913 a gallon after falling 0.47%

- Gasoline is trading at $3.1118 a gallon after falling 0.55%