MARKET WATCH: Oil futures prices waffle awaiting Fed’s stimulus decision

Crude oil futures prices fell on the New York market Jan. 27, which analysts attributed to the possibility that Federal Reserve policy officials might decide to increase the pace of tapering the central bank’s economic stimulus.

Previously, the Fed’s Open Market Committee reduced its bond-buying program to $75 billion/month from $85 billion/month. The committee is meeting Jan. 28-29 to evaluate the status of its bond-buying program.

Analysts suggest that reducing the program would strengthen the US dollar, which could dampen oil prices by making it more expensive for oil buyers using other currencies to buy oil denominated in dollars.

US natural gas prices dropped in trading on Jan. 27 but rebounded in early trading on Jan. 28 as cold weather again gripped parts of the country. Gas futures prices have been choppy given the changing winter weather and with the approach of the Jan. 29 expiration of the February contract.

Regarding world oil futures markets, PIRA Energy Group of New York issued a weekly market recap research note in which analysts suggest Brent crude futures prices will decline in coming weeks.

“Brent crude prices have stayed strong this month supported by relatively tight global supply-demand balances and low inventories, but will trend lower later this quarter as refinery maintenance cuts crude demand, crude supply continues its unrelenting growth in the United States, and supply disruptions elsewhere directionally ease,” PIRA said.

Energy prices

The New York Mercantile Exchange March crude contract fell 92¢ on Jan. 27, closing at $95.72/bbl. The April contract dropped 86¢ to settle at $95.36/bbl.

Heating oil for March delivery decreased 4.5¢ to a rounded $3.09/gal. Reformulated gasoline stock for oxygenate blending for February delivery was down 4.15¢ to a rounded $2.62/gal.

The February natural gas contract on NYMEX declined 33.5¢ to a rounded $4.85/MMbtu. On the US spot market, the gas price at Henry Hub gained 58.5¢ to $5.75/MMbtu.

In London, the March ICE contract for Brent crude delivery dipped by $1.19, closing at $106.69/bbl as the April contract dropped $1.16 to $106.03/bbl. The ICE gas oil contract for February was down $7.25 to $914.50/tonne.

The Organizational of Petroleum Exporting Countries reported its basket of 12 benchmark crudes was $104.62/bbl on Jan. 27, a loss of 42¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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