Author: umrpstpio

Extreme cold in the US continued to support energy prices last week. A combination of supply shortfall and decline surge boosted WTI crude oil price, making it outperform its Brent crude counterpart during the week. The WTI-Brent crude spread narrowed further, by US$ 1.13/bbl, to US$ 7.65/bbl (close) last week. On the macroeconomic front, the focus was on major central banks’ monetary decisions with both the Fed’s and the BOE’s minutes reiterated the stances made during the meetings.

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Weekly Fundamentals – Extreme Weather Sent Natural Gas to Years’ High

Crude oil prices climbed higher as US oil inventory surprisingly dropped after 10 consecutive gains. The front-month contract for WTI crude gained for a 4th straight day, rising to 1-month high of 97.58 before settling at 97.20, up +1.21%, while the Brent crude contract retreated after rising to a 2-month high of 113.02 earlier in the day.

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WTI Crude Price Soared as US Inventory Fell for the First Time in 11 Weeks

WTI crude oil price tumbled as amid increase in crude inventory. The front-month contract for WTI crude oil declined for the 4th consecutive day to a new 5-month low of 91.77 before settling at 92.3, down -1.47%. The Brent crude contract, however, climbed +0.39% during the day.

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WTI Crude Dropped on Inventory Gains

US WTI oil futures have hit $108 a barrel and for the first time since 2010 the American NYMEX crude contract has overtaken European Brent prices as pipeline and rail shipments helped clear a bottleneck that reduced the price of the US benchmark on the market.

Latest WTI Oil Price

US Light crude oil futures for September 2013 delivery was trading at $108.23 a barrel, 08:33 GMT this morning in electronic trading on the NYMEX. WTI averaged $17.47 less than Brent in 2012 and traded as much as $23.44 lower than its European counterpart in February this year.

Balance in the Market

Improved pipeline networks and the use of rail links are helping to ease the North American oil glut created by rising production of crude from shale formations. WTI has jumped 18 percent this year, while Brent has decreased 2.5 percent as North Sea supplies stabilised after maintenance.

“The price change reflects the changing balance in the market. It’s the perception of traders that you are not going to have the surplus in the US longer term. We are having more rail and pipeline capacity.”
said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

“The dynamics are changing. It’s a sign that oil is not just sitting in Oklahoma anymore. We are getting oil out of the storage to the market.” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.

US crude inventories dropped 6.9 million barrels in the week ended July 12 to 367 million, the lowest level since January 18, the US EIA (Energy Information Administration) reported last Wednesday.

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WTI oil futures hit $108 and overtakes Brent for first time since 2010

US WTI Light crude oil futures open Wednesday’s trading session back over $104 a barrel following news that the US API (American Petroleum Institute) reported a 9 million barrel drop in American crude supplies for the week ended July 5.

Latest WTI Oil Price

US Light crude oil futures for August 2013 delivery was trading at $104.32 a barrel, 07:30 GMT this morning in electronic trading on the NYMEX, which is a 14 month high. Following the API’s data, August 2013 WTI oil futures traded as high as $104.72, well above the $103.53 settlement on NYMEX.

The API data comes ahead of the more closely watched US EIA (Energy Information Administration) report due out later today.

“This is a big shock,” said Phil Flynn, senior market analyst at Price Futures Group. “While most were looking at another drawdown in supply, no one expected this drop.”

Oil traders guessed that a fund or another entity was betting on a large draw in crude supplies when inventory data was reported in the afternoon, making oil for the closer delivery months more valuable, hence the rise for oil prices at the same time as the US dollar carried on gaining strength on currency markets.

The US Dollar Index hit a fresh three year high against a basket of currencies this morning, trading near the 85 mark. A stronger US dollar tends to cap commodity prices including crude oil which are priced in the currency.

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WTI crude oil price breaks over $104 on poor weekly US API data

Strength in USD sent commodities lower. The G-7 meeting over the weekend appeared to justify further weakness in the Japanese yen while Fed Chairman Bernanke warned that “important risks remain in the short-term wholesale funding markets”. Commodities were mixed last week.

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USD Surges as G-7 Accepts Yen’s Weakness