Crude Fluctuates Before Inventory Report From EIAMoming Zhou
West Texas Intermediate crude fluctuated before government data that may show inventories dropped and as Federal Reserve Chairman Ben S. Bernanke said the pace of bond purchases was not on a preset course.
Prices were little changed as the Energy Information Administration will probably say that stockpiles fell by 2 million barrels last week, a Bloomberg survey showed. The central bank’s asset purchases may be reduced more quickly or expanded as economic conditions warrant, Bernanke said in prepared testimony before the House Financial Services Committee.
“We need to see a pretty sizable draw to get the rally started up again,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The big fear in the market is that the Fed pulls back on its stimulus.”
WTI for August delivery slid 8 cents to $105.92 a barrel at 9:08 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 1.6 percent below the 100-day average.
Brent for September settlement gained 4 cents to $108.18 on the London-based ICE Futures Europe exchange. Volume was 19 percent below the 100-day average.
Crude stockpiles probably dropped in the seven days ended July 12 to 371.9 million barrels, following a decline of 20.2 million in the prior two weeks, according to the Bloomberg survey. The American Petroleum Institute said yesterday that supplies dropped 2.6 million barrels, according to a person familiar with the report.
“We did have a draw in crude from the API report yesterday,” McGillian said. “If we get that confirmed from the EIA, the market might try to retest recent highs.”
The API began releasing its weekly supply statistics on a subscription basis this month. The industry group collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA for its weekly survey.
If the economy improved faster than expected, and inflation rose “decisively” back toward the central bank’s 2 percent target, “the pace of asset purchases could be reduced somewhat more quickly,” Bernanke said. He has said the Fed may start reducing $85 billion in monthly bond purchases, known as quantitative easing, later this year.
“People are going to realize that tapering of quantitative easing is on the cards, and there’s not going to be an escape from this,” said Hakan Kocayusufpasaoglu, chief investment officer at Archbridge Capital AG, a Zug, Switzerland-based hedge fund.