Sam Fletcher
Senior Writer
HOUSTON, Jan. 15 -- After falling to a 3-week low over three prior trading sessions, crude rebounded above $94/bbl Jan. 14 on the New York market because cold weather increased demand for fuel oil in the Northeast and the value of the dollar dropped to a near-record low, prompting an investment shift to commodities as a hedge.
"Cross commodity support continued," said Olivier Jakob of Petromatrix GMBH, Zug, Switzerland. "Wheat and corn opened limit up, gold made new highs and in that context the oil complex could not sustain the [downward] pressure of last week."
Houston-based analysts with Raymond James & Associates Inc. reported, "The dollar fell as low as $1.4915 against the euro on speculation that the Federal Reserve will lower interest rates this month." The front-month gold contract settled above $900/oz for first time on the New York market, hitting a spot-month high of $907.60/oz before closing at $901.60/oz, up $5.50 for the day.
Heating oil jumped by 2% as heavy snowfall closed schools and canceled flights in Boston. But the mostly small, family-owned heating-oil distributors in the Northeast claim their profit margins are being trimmed because they can't pass their entire cost increase on to customers. Many distributors reportedly are using bank lines of credit to buy heating oil supplies.
Moreover, Jakob said, "A new force majeure [declared by Royal Dutch Shell PLC] on Nigerian Forcados crude oil due to pipeline sabotage maintains a risk premium, especially as some reports are also indicating that gunmen attacked yesterday a supply vessel to the Mystra FPSO off the coast of Bonny."
However, Raymond James analysts said crude prices were down in premarket trading Jan. 15 on expectations that the Department of Energy report on Jan. 16 will show the first increase in US crude inventories in more than 2 months.
Energy prices
The February contract for benchmark US sweet, light crudes escalated by $1.51 to $94.20/bbl Jan. 14 on the New York Mercantile Exchange. The March contract gained $1.71 to $93.87/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up $1.51 to $94.21/bbl. Heating oil for February delivery jumped by 5.33¢ to $2.59/gal on NYMEX. The February contract for reformulated blend stock for oxygenate blending (RBOB) increased 5.25¢ to $2.37/gal.
The February natural gas contract climbed 14.3¢ to $8.35/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., jumped by 29.3¢ to $8.45/MMbtu.
"Natural gas increased 1.8% as forecasts are calling for colder weather in the near term. The National Weather Service forecast below-normal temperatures in all of the lower 48 States, except Florida, for January 19-23," said Raymond James analysts.
In London, the February IPE contract for North Sea Brent crude gained $1.85 to $92.92/bbl. Gas oil for February increased $11 to $808.50/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes inched up 12¢ to $88.62/bbl on Jan. 14.
Contact Sam Fletcher at [email protected]
