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Friday, February 27, 2015

Crude settles at lowest level in nearly a month

Strong US dollar pushes prices down 


Crude oil futures settled at their lowest level in nearly a month on Thursday, 26 February 2015 at Nymex with strength in the U.S. dollar adding insult to injury to a market that is already suffering from record-high crude supplies in the U.S. Natural-gas prices, meanwhile, dropped by almost 6% after U.S. government data showed that supplies fell less than expected last week despite the bitter cold in the eastern U.S. Industry experts pointed to the dollar's rise against the euro as the main driver for the abrupt plunge in oil. 

April crude dropped $2.82, or 5.5%, to settle at $48.17 a barrel on the New York Mercantile Exchange. That was the lowest close for a most-active contract since late January. 

Wednesday's U.S. weekly crude stockpile data was largely bearish with a larger-than-expected increase of 8.4 million barrels reported by the Energy Information Administration. But gasoline supplies fell by more than the market expected. 

Economic data included Initial Claims, CPI, Durable Orders, and FHFA Housing Price Index. The initial claims level increased to 313,000 from an upwardly revised 282,000 (from 281,000) while the consensus expected an increase to 290,000. The Department of Labor reported that there weren't any special factors impacting the initial claims level. 

The CPI index declined 0.7% in January after declining an upwardly revised 0.3% (from 0.4%) in December while the consensus expected a decline of 0.6%. As expected, a large drop in gasoline prices was the primary catalyst for the decline in consumer prices. Gasoline costs fell 18.7% in January after declining 9.2% in December. The resulting gasoline decline caused overall energy prices to fall 9.7% in January. Excluding food and energy, core CPI increased 0.2% in January after increasing 0.1% in December while the consensus expected an increase of 0.1%. 

Durable goods orders increased 2.8% in January after declining a downwardly revised 3.7% (from 3.3%) in December while the consensus expected an increase of 1.7%. 

Among other energy products, the front-month March gasoline contract down 1.1 cents, or 0.7%, at $1.708 a gallon, pulling back after Wednesday's 6.1% rally. March heating oil ended at $2.136 a gallon, up 3.2 cents, or 1.5%. The March contracts for the products expire at the close of trading on Friday. 

April natural gas fell 16.5 cents, or 5.8%, to end at $2.697 per million British thermal units on its first full trading day as a front-month contract. The EIA reported Thursday that supplies of natural gas declined by 219 billion cubic feet for the week ended Feb. 20. Market had forecast a decline of between 239 billion cubic feet and 243 billion cubic feet. 
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