Commodities trading outlook: crude oil, natural gas futures

Both West Texas Intermediate and Brent crude benchmarks pared their daily gains in late European trade on Monday as an alleged rise in Libyan crude oil exports offset fears of disruptions in energy supplies from Russia. Natural gas declined as milder weather conditions over parts of the US limited demand for the energy source.

On the New York Mercantile Exchange, WTI crude for delivery in May traded at $103.51 per barrel at 13:55 GMT, down 0.22% on the day. Prices shifted in a range between day’s high and low of $104.55 and $103.34 per barrel. The US crude benchmark rose by 0.3% on Friday and settled the week 2.6% to the upside, its best weekly performance this year.

Meanwhile on the ICE, Brent futures for settlement in the same month were up 0.60% at $107.97 per barrel, having varied in a daily range between a four-week high of $108.38 and $107.26 per barrel. The contract slid 0.1% on Friday to $107.33 a barrel, trimming its weekly advance to 0.6%. Brent traded at a premium of $4.46 to its US counterpart, up from Friday’s settlement at $3.59 which was the narrowest since September 19th.

The prospects of rising Libyan exports pressured down the oil market, causing it to pare its daily gains. The countrys western Zawiya oil port and its adjacent refinery were reopened on April 12th, Mansour Abdalla, head of the plant’s oil measurement unit, said for Bloomberg.

The state-run National Oil Corporation lifted a force-majeure on exports from the Hariga port on April 10th and a tanker is preparing to load crude. Hariga is one of the four eastern ports that were seized by rebels last summer but control over it was handed back to the central government in a deal struck on April 6th. According to the agreement in question, the Zueitina and Hariga ports were supposed to reopen immediately, while the two larger ports, Ras Lanuf and Es Sider, should be surrendered within the next two to four weeks after more negotiations. Es Sider, the country’s largest port, has a daily capacity of 340 000 bpd, while Ras Lanuf can ship 220 000 barrels per day.

Andrey Kryuchenkov, an analyst at VTB Capital in London, said for Bloomberg: “The outlook is very comfortable with extra Libya supplies and relatively slack refinery demand. Geopolitical risks are still there and rising tensions in Ukraine or sanction talk will offer temporary support.”

According to Ukraine’s Interior Minister Arsen Avakov, camouflaged gunmen fired on government forces near Slovyansk. Meanwhile, Russia’s Ambassador to the United Nations Vitaly Churkin said before the U.N. Security Council that “henchmen” of Kiev’s pro-European government are organizing attacks, backed by its Western allies.

Lyall Grant, Britain’s U.N. ambassador, said that Russia has stationed around 40 000 troops near its border to Ukraine after another 25 000 were moved into the recently annexed Crimea region.

Market players are looking ahead at upcoming data from China, the world’s second-biggest oil consumer, for further signs of economic slowdown and to gauge demand prospects. China’s National Bureau of Statistics is expected to report that the Asian economy grew by 1.4% in the first quarter, down from 1.8% in the last three months of 2013. Year-on-year, growth is expected to have slowed to 7.3% from 7.7% in Q4, below the government’s official target of 7.5% and near the minimum level needed to ensure stable employment.

Investors are also awaiting the release of key economic data from the US, including consumer inflation, housing data, initial jobless claims and New York and Philadelphia manufacturing gauges.

Natural gas

Meanwhile on the New York Mercantile Exchange, natural gas futures for settlement in May slid by 1.39% to $4.556 per million British thermal units by 13:58 GMT. Prices held in a daily range between $4.646 and $4.539 per mBtu respectively. The energy source fell by 0.75% on Friday but closed the week 4.5% higher following a bullish US storage report.

The Energy Information Administration reported last Thursday that US natural gas inventories rose by 4 billion cubic feet in the seven days through April 4, compared to analysts’ expectations for a gain of 15 billion cubic feet. The five-year average is an increase of 9 billion cubic feet. Total gas held in US underground storage hubs fell to an 11-year seasonal low of 826 billion cubic feet. US gas stockpiles were 50.7% below last year’s amount of 1.675 trillion cubic feet during the comparable week. The deficit to the five-year average remained unchanged at a record 54.7%.

Gas prices were pressured on Monday as demand fell to moderate levels due to mild temperatures. NatGasWeather.com reported that milder conditions have pushed into the eastern US ahead of a currently strengthening spring storm where near to above normal temperatures are expected. Temperatures are projected to reach highs of between 60 and 70 degrees Fahrenheit across the Northeast and around 80 in the Southeast.

However, the warm up will be brief, the website reported, as a coming cold blast will push deep in the southern parts of the country and then move toward the eastern US on Tuesday.