Oil prices continued to rally Apr. 25 with the front-month crude contract climbing 2.4% in the New York futures market on speculation of US military intervention after US Defense Secretary Chuck Hagel said the Syrian government “likely” used chemical weapons “on a small scale” in its 2-year conflict with rebels.
Other countries have made such claims, but this is the first time the White House has said US intelligence agencies reported that possibility.
In Houston, analysts with Raymond James & Associates Inc. said, “Hagel has urged caution until the facts are in place—after all, the US track record of identifying weapons of mass destruction in the Middle East is less than completely stellar.”
The West Texas Intermediate and North Sea Brent price spread dropped below $10/bbl for the first time in more than a year.
Equity markets were encouraged by news from the US Labor Department that new applications for jobless benefits “fell further than forecast to 339,000, increasing confidence in the economy and providing further support to commodity prices,” Raymond James analysts noted. Reaction of energy stocks was mixed, with the SIG Oil Exploration & Production Index up 0.7% while the Oil Service Index slipped 0.3%.
In other news, the Commerce Department reported Apr. 26 US economic growth escalated to an annual rate of 2.5% in the first quarter of this year, the result of the strongest consumer spending in more than 2 years. Government spending fell, however. Analysts say tax increases and federal budget cuts could slow the US economy later this year.
The June contract for benchmark US light, sweet crudes gained $2.21 to $93.64/bbl Apr. 25 on the New York Mercantile Exchange. The July contract increased $2.22 to $93.91/bbl. On the US spot market, WTI at Cushing, Okla., was up $2.21 to $93.64/bbl
Heating oil for May delivery rose 6.04¢ to $2.90/gal on NYMEX. Reformulated stock for oxygenate blending for the same month advanced 6.44¢ to $2.81/gal.
The May natural gas contract inched up 0.1¢ but closed essentially unchanged at a rounded $4.17/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 9.6¢ to $4.18/MMbtu.
In London, the June IPE contract for Brent was up $1.68 to $103.41/bbl. Gas oil for May increased $10 to $857.50/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes gained 93¢ to $99.89/bbl.
Contact Sam Fletcher at firstname.lastname@example.org