After trading down to $47.80 the April futures have reversed a bit and are trading at $49.02.
Natural gas did not reverse and is changing hamds at $2.691.
We expect both to be lower a month from now.
From Hard Assets Investor:
Energy underperformed, while other commodities advanced.
Most cost commodities rallied today, shrugging off a big spike in the U.S. dollar. However, energy prices were the exception as both oil and natural gas were hammered. Meanwhile, stock markets retreated amid profit-taking after running up to record highs earlier this week.
In today's economic news, the Bureau of Labor Statistics reported that the Consumer Price Index in the United States fell by 0.7 percent in January, slightly more than the expected 0.6 percent decline. At the same time, the core CPI, which excludes food and energy, increased by 0.2 percent in January, faster than the anticipated 0.1 percent increase. On a year-over-year basis, the headline CPI was down by 0.1 percent, the first negative reading since 2009, while the core CPI was up by 1.6 percent....
- Crude oil fell as traders focused their attention on the record inventory levels in the U.S. That pushed WTI to an $11.79 discount to Brent, the highest level in more than a year. The U.S. benchmark was last trading lower by $2.29, or 4.49 percent, to $48.70, while the European benchmark lost $1.14, or 1.85 percent, to $60.49.
"We're going to see pretty fast inventory builds over the next few weeks," Francisco Blanch, head of commodity research at Bank of America-Merrill Lynch, told CNBC. "If you run out of [inventory] space, prices tend to react a lot more violently to adjust that supply and demand imbalance and that's what we expect over the next few weeks," he said, forecasting both WTI and Brent will fall toward $30 a barrel.
"Within around two months, [onshore storage will] be completely exhausted," Ivan Szapakowski, a commodity strategist at Citigroup, added. "The only remaining storage globally will then be floating storage, tankers."
- Natural gas plunged $0.20, or 6.88 percent, to $2.70/mmbtu after the EIA reported that operators withdrew 219 billion cubic feet from storage last week, less than the 233 to 238 bcf that most analysts were expecting.
"Everyone, myself included, over-estimated the cold," said Stephen Schork, President of Schork Group Inc. "From the mid-Atlantic, up to New England and through the Midwest it was cold, but it was relatively warm out West and you had the President's Day weekend. Those two factors were hard to gauge."
"The market appears to be discounting the overall impact of the end-of-season reduction in inventories, electing instead to look beyond the winter to the possible record-breaking injection season ahead," added Teri Viswanath, director of commodities strategy at BNP Paribas....MORE