WTI Falls to $100/bbl on China Bond Concerns
NYMEX-traded crude futures fell on Tuesday, briefly touching US$100 per barrel (/bbl) for the first time in a month as the potential for more Chinese corporate-bond defaults and rising domestic crude stocks stirred concerns about the growth of global oil demand. China’s economic health is key to the oil market and the price outlook, according to market observers. The 18% plunge in Chinese exports was “unexpected” by many investors and comes on the heel of fears over China’s banking system and the equivalent of their money market industry. West Texas Intermediate (WTI) for April delivery slid $1.09 to settle at $100.03/bbl, its lowest close in since February 11. Across the Atlantic, London-traded Brent moved opposite its American counterpart. The North Sea benchmark rose on the ongoing tensions in Ukraine, as the EU and United States prepared sanctions against Russia. Brent’s premium over WTI finished $1.56 wider at $8.52/bbl, its widest settlement since February 17. The spread narrowed to as narrow as $5.44/bbl on March 5, its tightest point in nearly five months.
Natural Gas Settles Down 1% on Growing Output
U.S. natural gas futures slipped about 1% on Tuesday as the market awaited direction from a government storage report due out later this week that is expected to show a large, late-winter withdrawal. NYMEX-traded natural gas for April delivery closed down 4.6¢ at US$4.605 per million British thermal units. Gas prices have spent nearly two weeks consolidating above a five-week low at $4.441/mmBtu, as traders balance the remaining weeks of winter heating demand and forecasts that storage levels will fall below 1 trillion cubic feet (Tcf) for the first time in more than a decade against indications of increasing gas-to-coal switching and near-record natural gas production levels. The U.S. Energy Information Administration (EIA) on Tuesday raised its estimate for 2014 U.S. natural gas production to a record 71.96 billion cubic feet (Bcf) per day and projected gas in storage would end the winter season at 965 Bcf. By the start of next winter, the EIA said nearly 2.5 Bcf will be injected to rebuild end-of-October inventory to 3.459 Bcf. The agency said higher gas prices should spur production and reduce demand for gas from the power sector.
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