Downside Pressures On Oil Market

The possible rise in crude stockpiles for an eighth straight week in the United States is weighing on crude prices on Tuesday, offsetting support gained from the strong equity markets.

For a seventh straight session, the Dow Jones hit another record high on Monday, as Friday`s strong U.S. jobs data revived confidence of a steady recovery, boosting the appetite for risk and lifting stocks higher.

Yet the possible rise in crude stockpiles in the United States is weighing in on prices. Crude supplies probably increased by 2.25 to 383.6 million barrels, the highest level since June, in the week to March 8 ahead of the Energy Department data.

The American Petroleum Institute (API) will release its crude inventories report later today. The Energy Information Administration (EIA) will release the weekly crude inventories report tomorrow.

- Crude oil is trading as of this writing around the $91.75 a barrel level, compared with the opening at $91.84. The highest is at $92.25 and the lowest is at $91.67.

Adding to the downside pressures on oil market is the likelihood of a resumption in exports from South Sudan. Sudan and South Sudan agreed to resume oil exports through pipelines in Sudan within two weeks, more than a year after Juba shut down its entire output.

- Brent is trading as of this writing around the $109.95 a barrel, after falling 0.24% especially as the North Sea pipeline that was closed this month is operating normally.

Support for oil prices came today from the increase in demand from the world’s second largest crude consumer. China’s oil demand rose 4.9% in February, compared to a year earlier to about 10.14 million barrels per day as refiners raised crude output.

Also keeping a floor under oil prices are continued Middle East tensions. Syria’s civil war and talks over Iran’s nuclear program trigger worries of a possible supply disruption from the region.

Today, markets will be waiting for data from Spain’s and Italy’s bond sales and the UK’s manufacturing and industrial production. Italy is struggling to form a government and European Union leaders will meet on March 14-15 in Brussels.

- Natural gas is trading as of this writing at $3.665 per 1,000 cubic feet after rising 0.44%

- Heating oil is trading at $0.96 a gallon after falling 0.31%

- Gasoline is trading as of this writing at $3.1482 a gallon after falling 0.13%