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Tuesday, February 24, 2015

Crude drops below $50/barrel

Prices drop amid excess supply concerns 


Crude-oil futures settled below $50 a barrel on Monday, 23 February 2015 at Nymex amid investor concerns about excess crude supply in U.S. markets, but cold weather and a refinery strike fed a 5% rally in heating-oil prices. Strength in the U.S dollar on Monday also put pressure on dollar-denominated prices for commodities. 

On the New York Mercantile Exchange, crude for delivery in April lost $1.36, or 2.7%, to settle at $49.45 a barrel. 

April Brent crude lost $1.32, or 2.2%, to end at $58.90 a barrel on London's ICE Futures exchange. 

The eurozone on Friday approved Greece's bailout extension, soothing jitters amid traders. 

On Friday, Baker Hughes reported a weekly drop in the number of rigs actively drilling for oil and natural gas in the U.S., but the fall in activity was not as fast as traders had been hoping. 

Economic data at Wall Street was limited to the Existing Home Sales report, which showed a 4.9% decline in January to a seasonally adjusted annual rate of 4.82 million from an upwardly revised 5.07 million (from 5.04 million) in December while the consensus expected a decline to 4.95 million SAAR. The existing home sales data is derived from actual closings. 

Even though mortgage rates declined significantly in January, the impact from lower mortgage rates will not be felt until February. Furthermore, inventory levels continue to be troublesome for growth. During normal sales periods, inventory levels typically hold at roughly 6 months at the current sales rate. In January, inventories represented only a 4.7 months' supply. 

Among other energy products, March gasoline closed about a half cent at $1.646 a gallon after a 1.5% climb. Heating-oil prices climbed on the back of the refinery strike, which raised concerns over production levels for the petroleum product. March heating oil jumped 10.6 cents, or 5%, to settle at $2.218 a gallon, on the heels of a 5.9% jump on Friday. 

March natural gas settled at $2.879 per million British thermal units, down 7.2 cents, or 2.4%, after a 4.1% gain on Friday.

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