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Thursday, February 12, 2015

Crude settles below $50/barrel

Increase in U.S. crude inventories shows no sign of a slowdown 


Crude oil prices ended lower at Nymex on Wednesday, 11 February 2015. The increase in U.S. crude inventories shows no sign of a slowdown, and supplies are holding around an 80-year high despite declines in the number of rigs drilling for oil. Oil futures settled below $50 a barrel after U.S. government data Wednesday showed a bigger-than-expected jump in weekly crude inventories. 

On the New York Mercantile Exchange, crude for delivery in March settled at $48.84 a barrel, down $1.18, or 2.4%. Prices dropped more than 5% on Tuesday. 

Early Wednesday, the U.S. Energy Information Administration said crude inventories rose 4.9 million barrels for the week ended 6 February 2015 to total 417.9 million barrels—the “highest level for this time of year in at least the last 80 years. The weekly increase was much larger than the 3.4 million barrels market had expected. The EIA report showed that gasoline supplies also climbed by two million barrels, while distillate stockpiles fell 3.3 million barrels. 

Economic data at EWall Street was limited to the MBA Mortgage Index and the Treasury Budget for January. The weekly MBA Mortgage Index fell 9.0% to follow last week's 1.3% increase. The Treasury Budget for January revealed a $18.00 billion deficit while the consensus expected a deficit of $19.00 billion. 

Traders and investors will closely monitor the outcome of a meeting in Brussels, Belgium Wednesday between European Union officials and Greece. Greece's new government says it is abandoning a good portion of its debt reduction and austerity measures. Those measures were a prerequisite for Greece to get more financing from the European Union. Greece needs a new financing package by the end of this month. Germany is taking a hard line with Greece, saying the country needs to honor its previous obligations. 

Among other energy products, Nymex gasoline for March, the benchmark gasoline contract—fell almost a penny to $1.543 a gallon, while March heating oil ended at $1.814, down 1.9 cents. 

Meanwhile, natural gas logged a third straight session gain, with March natural gas jumping 4.5%, or 12 cents, to $2.797 per million British thermal units.
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