Commodities trading outlook: crude oil, natural gas futures

Both West Texas Intermediate and Brent crude benchmarks remained pressured to the downside throughout Tuesdays trading session ahead of government data that may show US crude oil inventories fell for a 12th week in 13 through April 11th, coupled with the prospects of a gradual increase in Libyan crude oil exports. Ukraine tension kept the market underpinned. Natural gas declined amid weather forecasts for mild conditions across most of the US.

On the New York Mercantile Exchange, WTI crude for delivery in May traded at $103.13 per barrel at 11:41 GMT, down 0.88% on the day. Prices shifted in a daily range between $103.65 and $102.91 a barrel. The US crude benchmark rose by 0.3% to $104.05 a barrel on Monday, marking the highest close since March 3rd. Prices have gained 5.2% so far this year.

Meanwhile on the ICE, Brent futures for delivery in June stood at $108.40 per barrel, down 0.61% on the day, having varied in a range between day’s high and low of $108.99 and $108.36 a barrel. The contract added 1.55% on Monday and settled at $109.07 a barrel. Brent traded at a premium of $6.03 to WTI for delivery in the same month, up from $5.86 on Monday.

Fundamental view

Oil prices were pressured amid speculations government data tomorrow may show a 12th rise in US crude inventories in 13 weeks. According to a weekly Bloomberg News survey, US crude stockpiles probably rose by 1.5 million barrels in the week ended April 11th, while motor gasoline supplies, a closely-watched category during the summer season, likely declined by 1.75 million barrels. The industry-funded American Petroleum Institute will release its separate report later today.

Market players are awaiting the release of key economic data from the US to gauge the strength of the economy, including consumer inflation, housing data, initial jobless claims and New York and Philadelphia manufacturing gauges.

Consumer prices are expected to have risen by an annualized 1.4% in March, while the Core Consumer Price Index (Core CPI) likely remained flat at 1.6%. Month-on-month, both CPI and Core CPI are expected to register at 0.1%, the same as in February.

A separate report is projected to show manufacturing activity in the region of New York picked up in April after two months of downbeat readings.

Market players are looking ahead at Wednesday’s housing data that should show a rise in housing starts in March and a minor decline in the issuance of building permits. A separate report is expected to show a second straight monthly expansion in industrial production, by 0.5%, after activity in the sector contracted by 0.3% in January.

Due on Thursday are weekly initial unemployment claims and the Philadelphia Fed Manufacturing Index, which is expected to have marked a second straight month of expansion.

Confirmation of the positive forecasts or even stronger readings would improve oil’s demand prospects in the world’s top consumer, and is therefore considered bullish.

Natural gas

NYMEX Natural gas futures for settlement in May slid by 0.48% to $4.538 per million British thermal units by 11:44 GMT. Prices shifted in a daily range between $4.582 and $4.511 per mBtu. The energy source fell for a second day on Monday and lost 1.3%, settling at 4.560 per mBtu.

Meanwhile, natural gas declined for a third day on Tuesday amid forecasts for overall seasonal weather across most of the US through the end of April. According to MDA Weather Services, readings in most of the 48 lower states will be normal or above-normal through April 28th.

NatGasWeather.com reported that currently colder-than-average temperatures have set up across the central and eastern US and that lows in the range of between 20 and 30 degrees Fahrenheit in the mornings will heighten natural gas demand. However, conditions are expected to moderate on Wednesday and Thursday, while a following cold blast will be less impressive and mainly impact the Midwest and Northeast.

According to AccuWeather.com, the low in New York on April 18th will be 8 degrees Fahrenheit, the same as the average, while readings in Texas will bottom at 19 degrees, 1 above usual. Temperatures in Chicago will dip to -1 degree on April 18th before reaching a high of 23 degrees on April 23rd, 6 above normal.

Market players also eyed the upcoming government statistics, due at 14:30 GMT on Thursday.

Technical view

According to Binary Tribune’s daily analysis, in case WTI May crude manages to breach the first resistance level at $104.62 per barrel, it will probably continue up to test $105.19. In case the second key resistance is broken, the US benchmark will probably attempt to advance to $105.83.

If the contract manages to breach the first key support at $103.41 per barrel, it will probably continue to slide and test $102.77. With this second key support broken, the movement to the downside will probably continue to $102.20.

Meanwhile, Brent for delivery in June will see its first resistance level at $109.73. If breached, it will probably rise and test $110.39. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $111.64.

If Brent manages to penetrate the first key support at $107.82, it will likely continue down to test $106.57. With the second support broken, downside movement may continue to $105.91 per barrel.

As for natural gas, according to Binary Tribunes daily analysis, in case natural gas for settlement in May penetrates the first resistance level at $4.6243 per million British thermal units, it will encounter next resistance at $4.6887. If breached, upside movement will probably attempt to advance to $4.7313 per mBtu.

If the energy source drops below its first resistance level at $4.5173 per mBtu, it will see support at $4.4747. If the second key support zone is breached, the power-station fuels downward movement may extend to $4.4103 per mBtu.