Oil Slips as Warmer Weather Curbs Demand
NYMEX-traded crude prices fell on Friday, slightly eroding their sixth straight week of gains as the brutal wintry weather in the U.S. that has supported heating-fuel demand gave way to milder temperatures – triggering a sell-off in heating oil futures. Temperatures in the U.S. Northeast climbed into the 50s°-Fahrenheit range (above 10° Celsius) after a multi-month cold snap reduced stockpiles of heating oil to the lowest level in a decade. New York ultra-low sulfur diesel, or heating oil, futures tumbled by more than 2%, or around 8¢, to $3.099 per gallon. On the first day as spot month, West Texas Intermediate (WTI) for April delivery settled down 55¢ at US$102.20 per barrel (/bbl). In European trading, Brent crude futures were pressured by signs that Iran increased January oil exports to China and India. Domestic conflicts in Libya and South Sudan, as well as escalating protests in Venezuela had supported Brent earlier in the week. By Friday; however, Brent traders had priced in the supply risk. Front-month April Brent slipped 45¢ to close at $109.85/bbl, widening Brent’s premium to WTI to $7.65/bbl, from $7.55/bbl in the previous session.
Natural Gas Futures Finishes Week Up 18%
U.S. natural gas futures edged higher on Friday and gained nearly 18% on the as severely-depleted storage levels and projections for yet another bout of freezing weather kept cash prices above US$6 per million British thermal units (/mmBtu). A historically-cold winter has whittled away gas supplies amid extraordinary heating demand, driving prices up by as much as 50% this year from $4.20/mmBtu to $6.40/mmBtu – the highest since late 2008.
Winter weather has yet to ease across much of the U.S., even as large cities saw a brief reprieve of warmer temperatures last week. Most forecasts call for another far-reaching, intense late-winter cold snap this week and into early March that will stretch from East to West and into the southern states. Across the northern tier of the country, sub-zero temperatures are expected. NYMEX-traded gas for March delivery finished up 7.1¢ at $6.308/mmBtu. For the week, the front-month contract advanced 92¢, or 17.6%.
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