NewsThe EIA Report
Previous1.3 Million Barrels
Forecast1.4 Million Barrels
AnalysisCrude oil traded below $80 per barrel in the Asian session today, after the API report showed an unexpected spike in motor gasoline and distillate fuel inventories in the U.S, the number one consumer in the world. 

The report yesterday showed an incline in distillate fuel inventories, which includes heating oil, by 3.6% pointing to a retreat in demand levels on heating fuel in the U.S, due to expectations of improving weather conditions throughout this week.

Meanwhile, crude oil fell black by 2.1% after China, the second largest energy consumer in the world, raised the reserve requirements for banks by 50 basis points for the first time since 2008. China has warned repetitively of a forming bubble of the back of the massive provided funds and liquidity amid the crisis to cushion the blow from the global recession, and reiterated numerously its commitment to restrain liquidity and prevent such overheating in the economy.

Today, we await the EIA report, since stockpiles are expected to have risen in the U.S by 1.4 million barrels last week, compared to last week’s rise of 1.3 million barrels; therefore, the downside pressures are to persist on crude throughout the day.

The ongoing weakness in demand on crude oil, the rise in inventories throughout major oil consuming countries and OPEC holding onto previous production levels; are evidence that supports expectations of oil prices to average this year $70 – 80 per barrel, especially since major industrial countries have not completely recovered from the recession they are suffering from. 

In NYMEX yesterday, heating fuel contracts for February delivery ended at $2.10 per gallon down by 3.25 cents, as motor gasoline also fell by 3.38 cents to $2.06 per gallon; whereas natural gas fell by 2.6 cents to close at $5.56 per 1000 cubic feet. Meanwhile, in London Brent contracts for February delivery plummeted by 71 cents to $78.59.

As for today, crude contracts for February delivery opened at $80.07 per barrel, recording the highest at $80.22 and lowest at $79.60 per barrel, where it is currently trading around $80 per barrel.