More aggressive stimulus package plans from ECB takes prices higher
Crude-oil futures rose on Wednesday, 21 January 2015 as news the European Central Bank is close to outlining a more aggressive stimulus package to boost Europe's economy stoked hopes of more demand for crude. Oil traders anticipate Thursday's European Central Bank meeting will bring forward a decision on the size and scope of a bond-buying program.
Light, sweet crude futures for delivery in March rose $1.31, or 2.8%, to settle at $47.78 a barrel on the New York Mercantile Exchange. Futures ended Tuesday down 4.7%.
The Wall Street Journal reported that a bond-buying program on the table to help juice the eurozone would see monthly bond purchases of about €50 billion ($58 billion) for at least a year.
At Wall Street, stronger-than-expected U.S. housing starts may have also been considered a sign of improving demand prospects. Led by a large increase in single-family construction, new housing starts increased 4.4% in December to 1.089 million from an upwardly revised 1.043 million (from 1.028 million) in November. The consensus pegged new housing starts at 1.040 million. Single-family construction increased 7.2% to 728,000 from 679,000 in November, representing the largest number of single-family starts January 2008 (773,000). Building permits fell to a seasonally adjusted annualized rate of 1.032 million versus a revised 1.052 million for November (from 1.035 million) The consensus expected permits to come in at 1.060 million.
A German government five-year bond auction Wednesday fetched a record-low 0.04% return for investors—a sign that European investors fully expected a quantitative easing package on Thursday that will work to further weaken the Euro currency. Other European bond market yields are also near their record lows—mainly on concerns of freshly printed Euros streaming into the financial system in the coming months.
The Bank of Japan on Wednesday cut its domestic consumer price inflation outlook to 1.0% from 1.7%, on an annual basis, and blamed lower crude oil prices for the move. This news was actually not as dour as many expected on the deflation-worry front. The BOJ left its monetary policy unchanged.
China's central bank chief said Wednesday that lower oil and other raw commodity prices are a positive for China's economic growth, and said China will keep its monetary policy stable.
The EIA will report on crude and crude derivatives inventories on Thursday, a day later than usual due to Monday's Martin Luther King holiday. Market expects the EIA to show crude-oil inventories up 2.5 million barrels on the week ended 16 January 2015. Gasoline stocks are seen up 1.05 million barrels, while distillate stocks, which include heating oil, are expected to have increased by 167,000 barrels.
Among other energy products, gasoline for February rose 1 cent, or 1%, to settle at $1.3255 a gallon on Nymex. February heating oil gained 2 cents, or 1.2%, to end at $1.6464 a gallon on Nymex.
March natural-gas futures rose 14 cents, or 5%, to settle at $2.9740 per million British thermal units. That put an end to a three-session losing stretch for natural gas. Futures lost 10% on Tuesday.
