Crude Oil Futures Close Flat

Oil traversed a wide trading range Thursday, going as high as $126.64 a barrel and as low as $120.75.
By Chuck Marvin ,

Updated from 3:44 p.m. EDT

Crude oil futures traversed a wide trading range Thursday, with June West Texas crude fetching an intraday high of $126.64 a barrel and falling as low $120.75 a barrel on the low end.

The near-term WTI contract settled down little changed, though, losing 10 cents at $124.12. July Brent crude, which will become the near-term contract after the market close, was down 61 cents at $121.25 a barrel.

Reformulated gasoline was 1.5 cents lower at $3.17 a gallon, and heating oil rose fractionally to $3.62 a gallon. Near-term natural gas dropped 20 cents to $11.40 per million British thermal units.

Energy commodities started the day strong, fueled by bearish economic data that weighed heavily on the U.S. dollar. The price of oil tends to rise when the greenback declines in value because oil is denominated in U.S. dollars in international markets.

The Federal Reserve reported early Thursday that industrial production fell 0.7% in April. Analysts were expecting a 0.3% decline. Adding to the malaise was the latest data on manufacturing in New York state, which also landed below analyst forecasts.

However, the futures market reversed course at midmorning after the Energy Information Administration released the latest inventory figures for domestic natural gas.

Natural gas stores rose by 93 billion cubic feet during the week ended May 9. Although the number was well within the range predicted by analysts, it was evidently not bullish enough to perpetuate the commodities advance that until today lasted nearly two weeks and elevated the price of natural gas by nearly 10%. June natural gas quickly fell on the news from its intraday high of $11.72 per million British thermal units to $11.14.

Once natural gas prices flipped to the downside, the remainder of its energy peer group followed suit, ending an impressive short-term climb that took crude and heating oil futures to new all-time highs and lifted the price of diesel fuel to its best point in a year.

While some traders may be blaming the EIA inventory report for the retreat, the real cause was "buyer exhaustion," according to Thomas Hartmann, energy analyst at Altavest Worldwide Trading. "Crude stalled while trying to get above the $126.50 a barrel level, so there appears to be a short-term top in the market," Hartmann says. "Crude needs to fall back some and redefine its support level before marching forward again. I don't think this is a full-time top for crude," he added.

Regarding the slide in natural gas prices, Hartmann said that "there is already a large premium built into the market. When the inventory numbers came in as expected, investors weren't left with anything to trade upon. With crude and nat gas at their current levels, the markets need major headline news" to continue moving ahead.

Meanwhile, energy stocks were mixed. Integrated stocks largely advanced, with

BP

(BP) - Get Report

gaining 1.3% to $72.94,

Chevron

(CVX) - Get Report

moving 1% higher to $97.97, and

Exxon Mobil

(XOM) - Get Report

adding 0.7% to near $90.50.

Additionally,

Petrobras

(PBR) - Get Report

, the Brazilian national oil company, gained 1.1% to $67.02 per ADR after

Bloomberg

published an article promoting the company's offshore exploration activities. The company is reportedly tying up deep-water rigs with long-term contracts at a voracious pace, leaving few leftover rigs available for other companies to drill with.

However, E&P stocks did not fair as well in the trading session.

Chesapeake Energy

(CHK) - Get Report

lost 1.5% to $56.31 a share,

Cabot Oil & Gas

(COG) - Get Report

dropped 2.2% to $60.98, and

Imperial

(IMO) - Get Report

fell 3% to $55.66.

In other energy-related news, the U.S. House of Representatives approved a bill Thursday that gives the Commodity Futures Trading Commission the authority to intervene in electronic commodity markets. Among other items, the bill requires record-keeping for electronic exchanges and regulates certain types of speculation.

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