Benchmark U.S. crude-oil futures recovered from early Wednesday losses to sit flat in electronic trade, despite data showing larger-than-expected crude inventories.
After rallying 1.2% to $97.57 a barrel Tuesday, crude oil for March delivery slipped to $97.32 a barrel during afternoon trading hours in Asia on Wednesday, after the American Petroleum Institute’s weekly report on U.S. inventories.
The API said crude stocks rose by 4.2 million barrels last week, overshooting expectations for an increase of 2.5 million barrels, as predicted in a Platts survey of analysts.
However, March crude managed to recover its losses later in the day to trade at $97.57 a barrel, unchanged from the close of Tuesday’s regular New York Mercantile Exchange session.
London-traded benchmark Brent crude for March also moved off lows to register a gain of 3 cents to $114.39 a barrel.
The markets now await separate weekly inventory data from the U.S. Energy Information Administration — generally seen as more definitive — due out later Wednesday.
Still, both Nymex and Brent futures remained range-bound, with various reports citing analysts as saying the market was cautious ahead of a policy decision due later Wednesday from the U.S. Federal Reserve.
Economists expect no changes for now to the Fed’s asset-buying program, though any surprises to the contrary would likely move commodity markets.
U.S. monthly private-sector employment data and the initial estimate for fourth-quarter gross domestic product were also slated for release Wednesday. Read: What to watch on U.S. economy on Wednesday
Headed to $100?
Looking further ahead, analysts were pondering Nymex oil’s path ahead, with Citi Futures analysts citing “growing market chatter speculating whether nearby [Nymex crude] futures could reach the $100 mark.”
The analysts were skeptical of a climb to $100, saying “we continue to see the U.S. market as the most oversupplied point within the well-supplied global market.”
They advised $94.70 as an entry point for a short position, with a protective buy-stop at $98.20 to limit the risk.
GFT Markets technical analyst Fawad Razaqzada, however, was more open to a possible return to $100 a barrel.
“I wouldn’t rule out the possibility for [Nymex crude] to reach $100 soon, especially with so much data due for release over the next three days or so,” Razaqzada said.
He cited a $96.90 resistance level broken in Tuesday’s session as a possible buying opportunity for bulls if the March contract slips back to that level.
Among other energy futures Wednesday, the February gasoline contract fell a penny, or 0.3%, to $2.97 a gallon.
The loss came after the API data showed a 2.4-million-barrel rise in inventories, while the Platts survey had indicated expectations for no change to gasoline stocks.
March natural gas rose 3 cents or 0.9% to $3.29 per million British thermal units, adding a cent to its gains after the release of AccuWeather’s spring weather forecast.
AccuWeather early Wednesday said the U.S. Northeast was likely to see more winter weather, including some possible late-season storms, which could boost demand for natural gas.
“Winter may stick around for six more weeks across the [U.S.] Northeast and Northwest, no matter what prognostication Punxsutawney Phil makes on Groundhog Day,” AccuWeather said. “Punxsutawney Phil” is a Pennsylvanian groundhog whose habits are monitored every Feb. 2 as an omen for how much longer winter weather will last.
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