Crude oil is holding above the $93.50 level after U.S. inventories dropped the most since December, according to the API report, however as markets await key data from the U.S. for clues on weather stimulus will continue or not, oil markets remain choppy.
Data from the American Petroleum Institute (API) showed a bigger-than-expected drop in crude stockpiles last week, by 7.8 million barrel; meanwhile, the Energy Information Administration (EIA) report today is forecast to show supplies declined by 800,000 barrels.
Investors are keeping their eyes on the U.S. dollar ahead of key U.S. data that may give clues on whether the Federal Reserve will continue its stimulus or not. Oil tends to move inversely against the dollar as it reduces the appeal of the dollar dominated commodities.
- Crude is trading at the time of writing around $93.75 a barrel, with the highest at $93.92 and the lowest at $93.38.
- Brent is trading around $103.61 a barrel after rising 0.36% or $0.37.
Today’s ADP employment change, tomorrow’s jobless claims and Friday’s non-farm payrolls data will be key in influencing the dollar’s movement. Markets will also focus today on the eurozone’s GDP and retail sales and the U.S.’s factory orders and ISM services.
“These economic indicators have gained a lot importance of late, and most markets, including oil, are looking at these numbers more than they were before”, said Ben Le Brun from OptionsXpress in Sydney.
Another boost for oil prices was given by the new sanctions imposed by the U.S. on Iran, this time targeting the country’s currency and auto industry, aiming to increase pressures on Tehran to abandon its nuclear program.
South Korea’s intentions to cut reliance on Middle East oil suppliers also gives support to oil prices. To diversify supply, Seoul plans to create new incentives for refiners that import non-Middle Eastern oil.
- Natural gas is trading at $4.008 per cubic feet after rising 0.25%.
- Gasoline is trading at $22.832 a gallon after rising 0.49%.
- Heating oil is trading at $2.7454 a gallon after rising 0.37%.