Winter Storms & Cold Temperatures Continue To Push Up Energy Prices

Crude oil continued its climb added by the weak US dollar and the continued cold across the US as heating demands far exceed estimates. Crude oil added 30 points to trade at 100.44, while Brent oil climbed to 109.80 on Monday and remains flat this morning. A weak dollar supports commodities priced in the greenback by making them cheaper for holders of other currencies. Oil prices also drew support from a report that showed developed countries started the year with the lowest oil inventories since 2008. 

Global oil inventories plummeted by 1.5 million barrels per day (bpd) in the last three months of 2013, the steepest quarterly decline since 1999, the International Energy Agency (IEA) said in its monthly report last week. The oil demand outlook for 2014 has also improved as global agencies the IEA, OPEC and the US Energy Information Administration have all raised their forecasts on stronger economic growth in Europe and the United States. 

Political instability in Libya added to global supply concerns. Libya’s oil production has dropped to 390,000 bpd, some 70,000 bpd less than last week, as protests have partly blocked flows from the El Sharara oilfield, the state National Oil Corp said

Severe cold weather in the U.S. has been boosting energy prices. The U.S. East Coast is expected to get more snow, and the cold is extending to other states. Optimism that China’s economy is still healthy after credit growth increased in January also helped lift energy prices. Talks begin Tuesday among Iran and six world powers on finalizing a deal to control Iran’s nuclear program. The outcome could have an effect on oil prices as Iran is a major oil producer and reduction of sanctions would allow the country to export more of its crude.

Heating oil eased after touching a recent high trading this morning at 3.0905 giving up 28 points while natural gas gained 86 points to reach 5.534 heading towards a new record high. Nymex natural gas prices increased by 4.8 percent on the back of snow storm across the US Midwest headed for the Northeast and Mid-Atlantic States thereby boosting the demand for the commodity and gas stockpiles are at seasonal low in last ten years. Natural gas rose to a nine-day high as a storm that dropped snow across the U.S. Midwest headed for the Northeast and Mid-Atlantic states, boosting demand for the fuel at a time when stockpiles are at a 10-year seasonal low. A winter storm may drop as many as 6 inches of snow on Chicago and Pittsburgh will reach the eastern U.S. tomorrow.