WSJ:Brent Drops From 2014 Highs Awaiting US Stockpile News
By Cassie Werber
LONDON--The price of Brent crude futures fell a little in London trading Thursday, after closing the previous session at the highest point this year, with poor Chinese economic data and expected U.S. stockpile hikes in focus.
Brent crude for March delivery was down 14 cents, or 0.1%, at $108.13 a barrel on ICE Futures Europe. U.S. crude-oil futures were up 11 cents, or 0.1%, at $96.84 a barrel on the New York Mercantile Exchange, a two-and-a-half-week high.
"The prices of both Brent and WTI are expected to fall today," wrote Commerzbank in a note to clients.
"Poor Chinese data overnight are likely to have put a dampener on hopes of robust demand. What is more, the U.S. Department of Energy looks set to report an increase in U.S. crude oil stocks this afternoon for the first time in eight weeks," they wrote.
HSBC's Flash Purchasing Managers' Index for the manufacturing sector in China, an indicator of growth, dropped sharply in January to 49.6. Numbers below 50 indicate contraction.
The Energy Information Administration had been expected to report a stockpile build of around 1 million barrels, but that is now likely to prove too low, said Commerzbank. They cited Wednesday' report from the American Petroleum Institute, an industry body, which suggested a inventory build of 4.9 million barrels last week.
The EIA hasn't reported a build for eight weeks.
JBC noted that the spread, or price difference between European and U.S. crude, closed at a one-month low yesterday. It has since tightened further, with the gap at $11.34 Thursday morning.
TransCanada's announcement that it has begun moving oil to the Gulf Coast through its southern link of Keystone XL is "the final element in the debottleneck of [delivery hub] Cushing," wrote JBC Energy in a note to clients.
Problems transporting crude around the U.S. has had the effect of suppressing the commodity's price, but the opening of the pipeline's long-awaited new section is expected to get it flowing more freely.
The ICE's gasoil contract for February delivery was up $1.75 at $920.75 a metric ton, while Nymex gasoline for March delivery was down 75 points at $2.6807 a gallon.
