Oil futures modestly fell Friday following a government report showing a smaller-than-expected decline in the nation’s crude supplies last week, but the commodity still logged a win for the week.
Crude for February delivery slipped 7 cents, or 0.1%, at $90.80 a barrel on the New York Mercantile Exchange. But tracking the front-month contract, crude rose by 2.4% for the holiday-shortened week.
The contract eased from the $91 level on Friday after the Energy Information Administration reported crude supplies for the week ended Dec. 21 fell by 600,000 barrels. Analysts polled by Platts had expected a 2 million-barrel drawdown.
But the difference between the EIA figure and the consensus estimate “was not large enough in the reduction of overall inventories” to hold oil futures at session lows, said Richard Hastings, macro strategist at Global Hunter Securities. The $91 level “is a pretty firm price, some of that anticipating a little bit of a weaker U.S. dollar.”
A weaker dollar makes dollar-denominated commodities more attractive to holders of other currencies.
Motor gasoline supplies rose by 3.8 million barrels, while distillate stocks rose by 2.4 million barrels, the EIA report said. Analysts had forecast an increase of 250,000 barrels for gasoline inventories and a decline of 350,000 barrels for distillates
Late Thursday, the American Petroleum Institute reported that crude supplies fell 1.2 million barrels on the week.
Oil in premarket trading pared gains as hopes for a last-minute deal on the fiscal cliff wavered. The February contract settled 0.1% lower in choppy Thursday trading.
The mild Thursday loss came after Senate Majority Leader Harry Reid warned the United States “looks like” it will go off the so-called fiscal cliff — a combination of billions in tax increases and spending cuts set to kick in at the start of 2013.
After the Nymex session closed, however, White House and congressional officials said that President Barack Obama, Reid and other senior legislative leaders from both parties would meet Friday in an attempt to craft a last-minute deal.
For the energy market, the so-called fiscal cliff “is a potential threat to capital investment, infrastructure rollouts to support onshore oil and gas production,” according to Hastings. But with oil near $91 and Brent crude at about $111 a barrel, “the evidence from the commodities side isn’t there yet,” he said, adding that the budget issue is a systemic risk.
“Systemic types of problems sometimes cannot be priced into the market, and therefore, you might not get any really big material reaction to fiscal cliff until it occurs,” Hastings commented.
Amid geopolitical news, media reports said Iran had begun naval maneuvers in the Strait of Hormuz early on Friday. One-fifth of the world’s oil passes through that point. Read more on Iran naval drills
Running down other energy futures Friday, gasoline for January delivery fell 2 cents, or 0.8%, to $2.80 a gallon, as January heating oil shed 3 cents, or 0.9%, to $3.04 a gallon.
Bucking the broader trend, February natural gas rose 6 cents, or 1.7%, to $3.47 per million British thermal units.
For the holiday shortened week, January gasoline rose 2.6% and January heating oil rose 0.7%. The contracts expired at the close of Friday’s session. Tracking the most active contract, natural gas gained 0.6% from last Friday.
Marketwatch
