Crude Oil & Natural Gas Climb On Demand And Growth

Crude oil on NYMEX was seen rising well into the $96.00 price range yesterday. WTI stretched the previous session advances, rising nearly 0.5 per cent to its highest in about five weeks.  However, rising crude oil stockpiles in the US and Euro Zone worries are likely to cap gains. The price of oil eased back this morning after a strong day of gains propelled by U.S. economic data suggesting a sustained recovery in the world’s largest economy.

Light Sweet crude oil fell 24 cents $96.10 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.53 to finish at a five-week high of $96.34 a barrel on the Nymex on Tuesday.

The U.S. Commerce Department said yesterday that orders for factory-produced durable goods rose more than expected in February. Home prices also rose in January, according to the Standard & Poor’s/Case-Shiller 20-city price index. That helped push up energy prices.

Economists say it is too soon to forget about the debt crisis in Europe. The latest crisis point was Cyprus, which teetered on the brink of bankruptcy and collapse of its financial system until a deal was reached early Monday to provide some 10 billion euros from international lenders. The deal, however, requires Cyprus to slash its oversized banking sector and inflict hefty losses on large depositors in troubled banks. This morning banks are set to open for the first time in over a week. It will be the next step to see the reaction by depositors and possible strikes as the contagion from Cyprus might seep throughout the eurozone.

The spread between WTI and Brent crude oil has narrowed sharply from $23.45 in February. An improving US economy and increased pipeline flows from the Midwest has supported the US benchmark oil contract. Meanwhile, Brent’s price has been pressured by increased supplies from the North Sea and concerns about Europe’s economy,

China will start a more flexible system for pricing domestic fuel from today, the first major revamp for four years, to help avoid shortages and tame consumption. The new scheme should reverse years of losses for China’s oil refiners, analysts said, by increasing the link with world crude prices and scrapping a rigid formula for altering prices for oil products such as gasoline and diesel. State oil companies like Sinopec Corp. and PetroChina have suffered losses at their refining segments as domestic fuel prices often lagged the gains in costs of crude oil.  The government also wants to use the more market-linked scheme to curb wasteful fuel consumptions, as China, the world’s second-largest oil user, is set to double its fuel use by 2030.

This morning natural gas is trading at the $4.00 price. Regaining this level each time traders sell off to book profits. Natural gas rose to an 18-month high following forecasts of below-normal temperatures that would boost demand for the heating fuel.

The Commodity Weather Group said the Midwest and East will have seasonal to below-average temperatures in the next 10 to 15 days. Gas stockpiles may have dropped 86 billion cubic feet in the week ended March 22, according to the median estimate of four analysts surveyed by Bloomberg. The five-year average change for the week is a gain of 6 billion.