Crude Logs First Session Loss in Six
NYMEX-traded crude futures marked their first session decline in six on Tuesday as traders awaited this week’s update on U.S. petroleum supplies and mulled monetary comments from Federal Reserve chairwoman Janet Yellen on the course of the central bank’s monetary policy. In her first testimony to Congress on Tuesday, Yellen said she would not make any abrupt changes to the Fed’s monetary policy and the U.S. central bank will continue to taper its bond-buying program. Some downside momentum also came on expectations that crude oil demand will continue to slow as U.S. refiners enter maintenance season. West Texas Intermediate (WTI) for March delivery finished down 12¢ at US$99.94 per barrel (/bbl) – still near a six-week high. Across the Atlantic, London-traded Brent crude rose slightly, supported by demand for heating oil, which gained on expectations that persistent cold weather in the U.S. will prompt another large drawdown in distillates. Frigid weather lifted heating oil prices, and U.S. RBOB gasoline futures saw some strength from traders unwinding the spread trade between the heating fuel and gasoline, according to some market observers. Front-month March Brent closed 5¢ higher at $108.68/bbl, widening Brent’s premium to WTI to $8.74/bbl, from $8.57/bbl a day earlier. With the March Brent expiring at the end of floor trading on Thursday, the more actively-traded April futures contract settled at $108.18/bbl, up 22¢.

Natural Gas Bounces Higher on Cold
U.S. natural gas futures advanced more than 5% on Tuesday as short-term forecasts for another blast of cold and dwindling storage triggered buying that ended a four-day slide. Cold, wintry weather is forecast in the East and South over the next five days before much of the country warms over the next week or two. Brutal cold blanketing the Midwest early Tuesday drove real-time power prices to more than US$1,000 per megawatt-hour (/MWh) for about 30 minutes. For most of 2013, the average power price in Indiana – the most-traded hub in the Midwest – was $37/MWh. NYMEX-traded gas for March delivery climbed 24.5¢, or 5.3%, to settle at US$4.824 per million British thermal units (/mmBtu). In post-settlement, electronic trade, the contact continued higher – reaching $4.92/mmBtu, up 7%, at one point. Natural gas futures are up about 14% since the start of the year, prices are still down 3% since early February. In the cash market, next-day gas spot prices at Henry Hub gained around 10¢ to average $7.73/mmBtu in Intercontinental Exchange trade. Elsewhere, early consensus estimates for the week ended February 7 predict a drawdown in natural gas stockpiles of between 197 billion cubic feet (Bcf) and 270 Bcf – well above the year-ago and five-year averages for that week.