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Friday, July 18, 2014

Crude soars by 2%

Airline crash and inventory report push up prices 


Crude Oil futures rose at Nymex on Thursday, 17 July 2014 after getting a boost from Wednesday's surprise supply decrease and a flare-up on concerns about Ukraine, including news that a Malaysia Airlines jet had crashed in that country. 

On the New York Mercantile Exchange, light, sweet crude futures for delivery in August rose $1.99, or 2%, to end at $103.19 a barrel. 

Commodities are seeing keen safe-haven demand in the immediate aftermath of a Malaysian airliner with 295 people on board that crashed near the border of Ukraine and Russia. The uncertainty of the matter-whether it was shot down, terrorism, or mechanical malfunction or pilot error, spooked the market place. In overnight news, the U.S. and European Union have slapped new and tough sanctions on Russia. Asian and European stock markets were pressured a bit on this news. 

There was still more downbeat economic data released from the European Union on Thursday. The bloc reported its construction spending fell 1.5% from April to May, but was up 3.5% from a year ago. The EU also reported its annual inflation rate remained at a very low 0.5% in June. The very low inflation and weak economic numbers in the EU have prompted the European Central Bank to inject monetary policy stimulus this summer, and more easing is likely on the way in the coming weeks. 

U.S. economic data released on Thursday included the weekly jobless claims report, new residential construction, and the Philadelphia Fed business survey. 

In product markets, Nymex reformulated gasoline blendstock for August - the benchmark gasoline contract fell less than a penny to settle at $2.8817 a gallon, while August heating oil rose 0.14 cents to end at $2.8592. 

Natural-gas futures on Thursday settled at their lowest since late November, rocked by a larger-than-expected increase in supplies. Earlier Thursday, the Energy Information Administration reported an injection of 107 billion cubic feet in natural-gas inventories for the week ended 11 July 2014. Market had expected an increase of up to 99 bcf. 

August natural-gas futures fell 17 cents, or 4%, to settle at $3.9540 per million British thermal units. Futures are down 6.5% so far this year. Natural-gas futures had hovered at $4.05 per million Btu before the report.
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