WTI Crude Pares Losses on Retail Sales and Initial Claims; Brent and Natural Gas Extend Slide

Edited by Vani Rao

Weak Chinese economy, increased US crude oil supply hurts crude prices

Crude Oil

On Thursday, March 13, 2014, the US crude rose 21 cents to end at $98.20 a barrel on the New York Mercantile Exchange (NYMEX). The light, sweet crude prices rebounded after a 4.47% decline in the last three sessions, the biggest drop in the last two months.

The US has announced a test sale of oil from its Strategic Petroleum Reserve as crude oil after the US Department of Energy reported a 1.2% jump in total crude oil reserves to 6.18 million barrels during the week ended March 7, 2014.

Oil and Gas graph 1

The US Department of Commerce reported better-than-expected retail sales data for February 2014. The US retail sales grew 0.3%, against a drop of 0.6% in January 2014. The economist median estimates by Bloomberg were expecting a rise of 0.2%, amidst the frigid climactic conditions across northeastern region of the country.

The US Labor Department announced on Thursday that initial jobless claims fell 9,000 in the last week to 315,000, the lowest reading since November 2013 and below the Bloomberg economist estimates of 330,000.

On the other hand, Brent crude fell on concerns of weak economic data release in China, the world’s largest crude oil importer. China reported a decline in exports and negative trade balance on March 8, 2014. The industrial output for January and February rose 8.6% on a year-over-year basis, below Reuters forecast of 9.5%. The combined retail sales improved 11.8% year-over-year, but below Reuters estimate of 13.5%. China’s crude oil demand fell 3.1%, or 9.98 million barrels a day, in January and February.

On Thursday, March 13, 2014, Brent crude April futures on the London-based ICE Futures Europe exchange fell 39 cents, or 0.36%, to $107.39 a barrel. Also during the week, the European standard crude oil fell $1.61 a barrel, or 1.48%. The crude oil spread between Brent and WTI crude increased to $9.19 a barrel.

Oil and Gas graph 2

The WTI and Brent crude were last trading at $98.20 and $107.57 a barrel, respectively, at the time of reporting.

Natural Gas

On Thursday, March 13, 2014, the natural gas prices fell to its seven-week low as the natural gas stockpiles fell broadly in line with the Bloomberg estimates.

The April delivery for natural gas futures on the NYMEX declined more than 2.38%, or 10.7 cents, to settle the day at $4.383 per million British Thermal Units (BTU). Natural gas April futures declined 2.5%,or 11.5 cents, on Wednesday to close at $4.490 per million BTU.

Oil and Gas graph 3

In its weekly report on Thursday, the EIA stated that the US natural gas stockpiles for the week ended March 7, 2014, declined 195 billion cubic feet, in line the Bloomberg median estimate of 196 billion cubic feet. US total natural gas stockpiles stood at 1.001trillioncubic feet, below the five-year average of 1.859 trillion cubic feet, and the lowest since 2004, for this time in 2014.

With milder climatic conditions in the horizon, the natural gas prices are likely to decline. Spring is a lean season for natural gas as there is no extreme temperature to hike the gas demand for heating or air conditioning purposes.

US Natural Gas was last trading at $4.385 per million BTU at the time of reporting.

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