Crude oil continues to trade on the high side at 96.72 adding 7 cents this morning on the back of the weaker US dollar while Brent oil eased by 33 cents
Crude oil continues to trade on the high side at 96.72 adding 7 cents this morning on the back of the weaker US dollar while Brent oil eased by 33 cents to 107.61. The spread is nearing $10. There have been a lot of events that affect the energy markets this past week. Big news includes the operation of the keystone pipeline. The opening of a pipeline to ease a supply bottleneck at a key storage hub has boosted U.S. oil prices, but analysts say the rally is likely to be temporary. The $2.3 billion pipeline last week started carrying crude 487 miles from Cushing in Oklahoma to Gulf Coast refineries in the southern state of Texas. The pipeline initial transportation rate of 300,000 barrels per day, about half of its maximum capacity, has so far disappointed investors.
Light, sweet crude for March delivery rose to $96.64 a barrel Friday on the New York Mercantile Exchange, ending the week with a 2.2% gain. It was the biggest weekly gain for U.S. oil futures in more than a month.
Oil prices were mixed in Asian trade Monday as dealers focused on the US Federal Reserve’s policy meeting this week in anticipation of further stimulus pullback. Markets are waiting to see if the US central bank’s Federal Open Market Committee (FOMC) will cut another US$10 billion from monthly asset purchases when it meets on Tuesday and Wednesday. In December, the FOMC said it would begin tapering the stimulus by US$10 billion to US$75 billion a month in January. The International Monetary Fund’s managing director Christine Lagarde warned over the weekend of the risks posed to global economic recovery from phasing out the U.S. stimulus too rapidly and deflation in Europe.
Also, less monetary easing in the U.S. could boost the dollar, making oil less affordable for holders of other currencies. Slowing growth in China was another factor weighing on oil prices. Preliminary results of a survey released last week showed China’s manufacturing would contract in January.
A gallon of regular-grade gasoline cost $3.3113 on average across the United States, down from $3.3459 two weeks earlier, according to the survey taken on Jan. 24. The average is 3.3 cents lower than $3.3443 average from the same period a year-ago period. The $3.3459 price published in Lundberg survey on Jan. 12 marked the highest level since mid-October. The decline was because of a decrease in wholesale prices by suppliers and refiners, said Trilby Lundberg, publisher of the survey. “We can point to the entire downstream half of the oil business to cutting the price on the street in the past two weeks,” Lundberg said. Gasoline inventories rose 2.12 million barrels to 235.3 million in the week that ended Jan. 17, the highest level since February 2011. The increase came as East Coast imports of gasoline jumped 30 percent from the prior week to 520,000 barrels a day. In the two weeks to Friday, West Texas Intermediate crude rose $3.92, or 4.2 percent, to $96.64 a barrel on the Nymex, while Brent oil climbed 63 cents to $107.88.