Commodities trading outlook: natural gas, crude oil futures

West Texas Intermediate crude was poised to snap two weeks of declines, following better-than-expected economic figures from the world’s top consumer. However, an extension to the list of individuals sanctioned by the US due to their ties to President Vladimir Putin added to oil’s previously eroded geopolitical premium, putting a floor under prices. Meanwhile, natural gas futures declined for a second day on Friday.

On the New York Mercantile Exchange, WTI crude for delivery in May rose by 0.94% to $99.83 per barrel by 14:36 GMT, having shifted in a daily range between $99.90 and $98.26 per barrel. US crude fell by 0.3% on Thursday, the first decline in three days, and settled the session at $98.90.

Meanwhile on the ICE, Brent futures for settlement in the same month traded at $107.43 per barrel, up 0.92% on the day. Prices held in a range between $106.02 and $107.45 a barrel. The European benchmark crude jumped by 0.6% on Thursday to $106.45 a barrel. Brent’s premium to its US counterpart widened to $7.70 from $7.55 on Thursday after it had settled at $6.68 on Wednesday.

Better-than-expected economic figures from the US on Thursday provided the energy complex with a better demand outlook. The number of people who filed for initial unemployment benefits in the week ended March 15th was close to a four-month low, adding to signs the labor market is gaining traction. Initial jobless claims rose to 320 000, beating projections for a jump to 322 000 from the preceding week’s 315 000.

Meanwhile, manufacturing activity in Philadelphia rebounded in March, with the Philadelphia FED Index registering at 9.0, which outstripped analysts’ expectations for a jump to 3.2 from February’s decline to -6.3. However, sales of previously owned homes matched projections for a drop a 4.6-million annualized rate in February, the lowest since July 2012.

The oil market, and particularly the Brent benchmark, drew support after the US expanded its list of individuals to be sanctioned due to their ties to President Vladimir Putin. Broadening of the sanctions to more than 20 prominent Russians marked an escalation of diplomatic pressure against President Putin for Moscow’s intervention in Ukraine.

Meanwhile, on the New York Mercantile Exchange, natural gas for delivery in April traded at $4.306 per million British thermal units at 14:39 GMT, down 1.43% on the day. Prices held in a daily range between $4.375 and $4.297 per mBtu. The contract fell to a seven-week low of $4.341 on March 14.

The Energy Information Administration reported yesterday that US natural gas inventories fell by 48 billion cubic feet in the seven days through March 14th, less than analysts’ median forecast of a 58 million cubic feet drop and compared to a withdrawal of 74 billion cubic feet the same week a year ago. However, the decline exceeded the five-year average drop of 30 bcf during the comparable period.

Total gas held in US underground storage hubs fell to a 10-year seasonal low of 953 cubic feet. US gas stockpiles were 49.4% below last year’s amount of 1.885 trillion cubic feet during the comparable week. The deficit to the five-year average widened to a record 47.9%, up from 46.2% a week earlier.