Oil futures extend selloff as sentiment remains bearish
London (Platts)--21Feb2013/651 pm EST/2351 GMT
Oil futures extended a selloff Thursday as market sentiment remained
bearish in the wake of lackluster economic indicators from the US and
Europe, and oil inventories data from the US Energy Information
Administration showed further builds in crude stocks.
NYMEX April crude settled down $2.38/b at $92.84/b, up slightly from a
six-and-a-half week low in the front-month contract of $92.63/b seen earlier
in the session. The April contract has shed $4.26/b (4.39%) in the last two
days of trading.
ICE April Brent also settled lower Thursday, closing down $2.07/b at
$113.53/b, after ticking upward from a three-week low of $113.32/b.
Analysts said that sentiment remained bearish across the fuel markets as
uninspiring macroeconomic indications, concerns about the future of
quantitative easing in the US, and crude oil inventory builds prompted a
continuation of Wednesday's downward trend.
"With what happened yesterday, the market was already looking rather
downbeat [today] and there wasn't too much to add cheer in the inventory,"
Schneider Electric analyst Matt Smith said.
The EIA reported a 4.143 million-barrel increase in US commercial crude
stocks over the week ended February 15 as refinery utilization declined by
0.9 percentage points. Additionally, there was a more-than 400,000 barrel
increase in stocks at Cushing, Oklahoma, the delivery point of the NYMEX
"There was a build in Cushing, which just exacerbated the selloff,"
The differential between the two front-month crude contracts briefly
climbed above $21/b Thursday before ICE Brent settled at a $20.69/b premium
to April NYMEX crude.
Analysts said that weaker-than-expected macroeconomic data was adding to
the downward trend in the market, with Wednesday's release of the US Federal
Open Market Committee meeting minutes from January compounding the bearish
"The euro zone manufacturing PMI fell to 47.3, on expectations of 49
reading," John Kilduff, of the Kilduff Report, said in a note. "This
evidences further economic decline for the euro zone, which has slipped
deeper in to recession than previously thought."
At the 2:30 p.m. EST (1930 GMT) NYMEX settle, the US dollar index was up
0.46% at 81.445, having earlier reached a near-six-month peak of 81.508 as
the euro and British pound continued to slide.
The dollar index has increased 1.18% in the last two days of trading,
while the euro has shed 1.60% and the GBP has fallen 1.17% over the same
period. The pound hit its weakest level against the dollar since July 2010 on
Thursday, briefly bottoming out at 1.5132 during overnight trade.
US CPI remained unchanged in January, bringing the total annual move to
1.6% before seasonal adjustment. The US Bureau of Labor Statistics showed an
increase in initial jobless claims over the reporting week ended February 16,
bringing the total to 362,000. Continuing jobless claims also ticked upward
to 3.148 million.
Additionally, Wednesday's FOMC meeting minutes re-awoke market concerns
of a possible premature end to the Federal Reserve's quantitative easing
program, analysts said.
"For those who consider the oil market to be more of an 'asset class'
than a commodity, the reaction to yesterday's release of FOMC meeting minutes
makes sense -- the market had been rallying on the assumption that the Fed's
asset buying program was solid and open-ended, and the minutes showed that
there had been at least some discussion about how and when to scale back,"
Citi Futures Perspective analyst Tim Evans said in a note.
Product markets also declined during US trading on Thursday, though the
NYMEX March RBOB contract reversed an early plunge to settle only 2.30 cents
below Wednesday's settle at $3.0365/gal. The contract had earlier hit a
three-week low of $2.9782/gal shortly after the 9:00 a.m. EST (1400 GMT)
market open, but reversed direction after a larger-than-anticipated decline
in US gasoline inventories.
The EIA showed 2.884 million-barrel fall in gasoline stocks over the
"With the loss of faith we saw in the market yesterday -- the flight of
crude and RBOB -- the decent draw has calmed that," Smith added.
The front-month RBOB contract fell 6.17 cents on Wednesday.
The distillate complex also weakened on Thursday, with both the NYMEX
heating oil and ICE gasoil complexes posting falls, even as EIA data showed a
2.227 million-barrel slide in US distillate stocks.
NYMEX March heating oil settled 6.06 cents lower at $3.0957/gal, while
ICE March gasoil was down $18.75/mt at $977.25/mt at 2:30 p.m. EST.
--Paula VanLaningham, email@example.com
--Edited by Katharine Fraser, firstname.lastname@example.org