MW: Oil futures fall as U.S. debt talks hit rough spot
By Myra P. Saefong and Barbara Kollmeyer, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures fell Thursday as investors pared back on their exposure to riskier assets amid dimming hopes that Washington will reach a debt deal before the end of the year.
Crude for February delivery CLG3 -0.41% fell 25 cents, or 0.3%, to $89.73 a barrel.
On Wednesday, the January contract — now expired — closed up 1.8% after scoring four straight winning sessions. Government data showing an unexpected decline in distillate inventories helped support those gains. Read: Oil futures score a fourth session of gains.
Negotiations between Republicans and the White House appeared to sour on Wednesday. President Barack Obama said it was “puzzling” that Republicans have not accepted his latest fiscal-cliff offer, while House Speaker John Boehner vowed to pass a so-called Plan B that keep in place tax cuts for incomes up to $1 million. Read: Republicans 'puzzling' on cliff deal: Obama
The Tell: What's in Boehner's 'Plan B' — and what's not.
The latest U.S. economic data also came into play, with traders searching through a raft of figures for clues on prospects for oil demand.
The Commerce Department said third-quarter gross domestic product grew at a seasonally adjusted annual rate of 3.1% in the third quarter, well ahead of the government’s initial estimate of 2% and its most recent tally of 2.7%. See: Third-quarter U.S. growth revised higher.
Separately, the Labor Department said first-time jobless claims rose to a seasonally adjusted 361,000 in the week ended Dec. 15. See: Initial jobless claims climb 17,000.
The upward GDP revision “was a potential support for investor sentiment, although we continue to see it as a poor guide to U.S. petroleum demand,” said Tim Evans, energy futures specialist at Citi Futures, in a note. Government data for the third quarter already showed that domestic petroleum consumption was off 1.9% from a year ago, he said.
On Wednesday, the Energy Information Administration reported that for the week ended Dec. 14, U.S. crude supplies dropped by 1 million barrels, narrower than the 2.3-million-barrel decline forecast by analysts polled by Platts.
Brent crude oil also slipped Thursday, with the February contract UK:LCOG3 -0.37% down 23 cents, or 0.2%, at $110.13 a barrel on ICE Futures in London.
Among Nymex-traded oil products, January heating-oil futures HOF3 +0.36% added 1 cent, or 0.3%, to $3.05 a gallon, while January gasoline RBF3 +0.13% rose half a cent, or 0.2%, to $2.75 a gallon.
Despite the increase in domestic supply of crude from the Eagle Ford and Bakken oil shale fields, fuel prices will still spike in the early part of the coming year “when refineries go into their turn-arounds to start producing the summer-blend gasoline,” said Bob van der Valk, an independent petroleum industry analyst based in Terry, Mont.
The average U.S. price for a gallon of regular gasoline stood at $3.219 Thursday, down from $3.412 a month ago, according to AAA’s Daily Fuel Gauge Report.
In other energy trading, natural-gas futures gained more ground after the EIA reported a bigger-than-expected drawdown in last week’s supplies of gas in storage.
January natural gas NGF13 +3.46% rose 11 cents, or 3.4%, to $3.43 per million British thermal units.
The EIA reported Thursday that gas inventories fell 82 billion cubic feet for the week ended Dec. 14. Analysts polled by Platts had forecast a decline between 74 billion and 78 billion cubic feet. See: Natural gas adds to gains after EIA supply data.
Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.
