Crude Oil Continues To Tumble While Natural Gas Climbs

               Global oil prices were mixed in Asian trade Wednesday as investors await the end of the US Federal Reserve’s closely watched policy meeting to find out its plans for its stimulus program. Brent crude is trading at 108.00 even gaining 21 cents while WTI crude oil gave up a few cents to trade at 104.87. The spread is under $4.00 well below the average.

 With the threat of military action in Syria receding, attention has turned to the outcome of the Fed’s two-day meeting, with expectations for a reduction in its $85 billion a month bond purchases, known as quantitative easing (QE). Federal Reserve Chairman Ben Bernanke will make a statement after the meeting before holding a news conference. “The Fed is expected to announce the long-awaited decision to taper asset purchases,” DBS Bank said in a market commentary, adding that market consensus is for a “cautious” reduction of about $15-20 billion. 

Oil prices rose to multi-month highs this month on fears that the US would launch military strikes against Syria to punish the Assad regime for its alleged use of chemical weapons on its own people. But prices eased after a US-Russia deal that will see Syria’s toxic arsenal destroyed has averted an attack for now. News that Libya has resumed some oil production has also helped put downward pressure on prices. The announced resumption of some oil production in Libya is also weighing on the market after the state-run news agency reported that output of over 400,000 bbls from two fields had resumed,” Armstrong wrote in a research note. Worker protests at the fields since July had crippled Libyan production.

Besides watching the upcoming FOMC meeting oil traders will be closely watching today’s EIA inventory release. The American Petroleum Institute (API) report yesterday that, US crude oil inventories declined by 252,000 barrels to 359.0 million barrels for the week ending on 13th September 2013. Gasoline inventories dropped by 641,000 barrels to 218.32 million barrels and distillate inventories slipped by 167,000 barrels to 130.40 million barrel.

The US Energy Department (EIA) is scheduled to inventories report today and US crude oil inventories expected to fall by 1.4 million barrels for the week ending on 13th September 2013. Gasoline stocks are expected to gain by 0.3 million barrels whereas distillate inventories are expected to shoot up by 0.8 million barrels for the same period.

Natural gas ended higher for a fourth straight session on Tuesday, backed by rising nuclear plant outages and bullish inventory expectations, despite light profit taking after posting an eight-week high early in the day. Natural gas is trading at 3.749 gaining 22 points today. Nuclear production has been down boosted the demand for natural gas which was compounded by higher temperatures across the US pushing up residential demand. - Fxempire.com