NewsCrude gains above $70 in the early session supported by Japan’s economic growthPreviousForecastAnalysisCrude futures rose this morning above $70 per barrel supported by the EIA report and growth from Japan. 

The release of the anxiously awaited weekly EIA report yesterday showed higher oil inventories by 0.2 million barrels, compared to the prior reading of 1.9 million barrels and lower than expectations of 0.7 million barrels; currently, inventories have are around 362.7 million barrels above the medium term average for this time of year. Meanwhile, motor gasoline plunged 0.3 million barrels last week and distillate fuel with includes heating also dropped by 1.0 million barrels while both remain above the medium term average for this time of year.

Though the EIA report showed mixed data it still was better than market expectations, where motor gasoline receded although we cannot deny that US inventories are within elevated levels; reflecting prevailing sluggish demand from the largest energy consumer in the world.

On the other hand, the Japanese economy, which is considered to be the third largest energy consumer in the world after the US and China, reported 1.2% expansion in the first quarter as the pace of the recovery picked the pace for the previous quarter's 1.0% which is still good news for the outlook for demand though the GDP missed estimates. 

In addition, Singapore managed to speed up its expansion in the first quarter, higher than previous and projected growth. The expansion witnessed in the Asian economy supports overall expectations that emerging nations and in particular the Asian Pacific will support demand and replace sluggish development from industrial nations.

Crude this month dropped from its high levels around $87 per barrel mainly driven by extending fears across markets over the spread of the European debt crisis; thus threatening Europe’s economic recovery, especially after numerous governments unanimously decided to use extensive measures to reduce their budget deficit.

Crude futures for July settlement yesterday opened around $72.55 recording its highest around $73.10 and lowest around $70.65, where it managed to close around $72.60 per barrel.

The S&P GSCI index closed around 486.96 after plummeting by 0.43 points; whereas the RJ/CRB Commodity index rose 1.73 points and closed around 254.93.

As for NYMEX as of 03:14 EST; motor gasoline tumbled towards $201.360 per gallon by $0.160; heating oil is trading around $195.130 per gallon after climbing by $0.610; whereas natural gas gained by $0.032 to record levels around $4.190 per 1000 cubic feet. In London, Brent ascended by $0.200 to record $73.890.

Crude opened today around $72.70 after recording its highest around $73.10 and lowest around $72.30 per barrel, while it currently trades around $73.00 per barrel.