Commodities trading outlook: natural gas, crude oil futures

Both West Texas Intermediate and Brent crude benchmarks edged lower on Tuesday ahead of private and government data that may show an eleventh weekly build-up in US crude oil inventories, while manufacturing figures from China spurred uncertainty over growth prospects in the world’s second-biggest economy and oil consumer. Meanwhile, natural gas futures traded little changed after falling for two days amid milder weather forecasts in the US.

On the New York Mercantile Exchange, WTI crude for delivery in May traded at $101.31 per barrel at 11:40 GMT, down 0.27% on the day, having shifted between day’s high and low of $101.57 and $101.01 per barrel. The US crude benchmark lost 0.1% on Monday after rising for three day and settled at $101.58 a barrel.

Meanwhile on the ICE, Brent futures for delivery in the same month were down 0.14% on the day at $107.61 per barrel. Prices varied in a daily range between $107.77 and $107.41 a barrel. The contract slid 0.3% on Monday to settle at $107.76. Brent traded at a premium of $6.37 to its US counterpart from Monday’s close at $6.18, down from $6.40 on Friday.

Oil prices retreated for a second day amid fears China won’t be able to reach Premier Li Keqiang’s 7.5% annual growth target, dimming demand prospects for raw materials.

Government data showed early on Tuesday that manufacturing activity in China matched projections and inched up to 50.3 in March, up from 50.2 in February. However, the minor expansion did not do much to brighten the economy’s growth prospects after a recent pile of downbeat data points.

The market was also pressured amid expectations that US crude oil inventories rose for an 11th straight week in the seven days through March 28th. According to a Bloomberg survey of seven analysts ahead of government data tomorrow, US crude supplies likely jumped by 2.5 million barrels to 385 million, the highest level since November, on the back of higher imports. Refinery utilization likely rose last week.

Meanwhile, on the New York Mercantile Exchange, natural gas for delivery in May traded at $4.375 per million British thermal units at 11:39 GMT, up 0.08% on the day. Prices held in a daily range between $4.389, and $4.343 per mBtu. The contract snapped two weeks of declines, as it added 4% last week, following a bullish government gas storage report.

While one spring storm moves out of the Great Lakes with lingering snowfall, a new one will be spinning up over the central Plains and sweeping through the eastern US over the next few days, NatGasWeather.com reported on April 1. The latter will bring a surge of milder temperatures into the eastern US over the next few days, significantly easing natural gas and heating demand.

After several days of milder conditions over the Midwest and Northeast, chilly temperatures will return Wednesday into Thursday, but the cool down will be brief as late in the week, another fairly strong storm develops and tracks across the central US and the Northeast, bringing above-average temperatures.