Sam Fletcher
Senior Writer
HOUSTON, Jan. 29 -- Crude prices increased Jan. 28 in the third consecutive session of the New York market as the value of the US dollar fell against six other major currencies. The price increase occurred amid expectations that the Federal Open Market Committee may cut its benchmark lending rate by half a percentage point to 3% during its Jan. 29-30 meeting.
The weaker US currency makes dollar-denominated oil cheaper in countries with stronger currencies. But it also fuels worries of a possible recession that might diminish US demand for energy, despite recent lending rate reductions by the Fed and other efforts to stimulate the economy.
Crude prices were up moderately in premarket trading Jan. 29 on expectations that the Organization of Petroleum Exporting Countries will maintain current productions at its Feb. 1 meeting in Vienna. "OPEC's current output target is 29.67 million b/d. Many OPEC officials believe that there is no need for additional production because the global oil market is 'well balanced,'" said analysts at the Houston office of Raymond James & Associates Inc.
Olivier Jakob of Petromatrix GMBH, Zug, Switzerland, reported technical trading of oil "is gradually starting to improve," with benchmark US crudes trading above the 5-day moving average for the first time since the first two market days of 2008 "and is starting to consolidate on the $89.30/bbl support."
Energy prices
The March contract for benchmark US sweet, light crudes rattled between $88.78/bbl and $91.36/bbl Jan. 28 before closing at $90.99/bbl, up 28¢ for the day on the New York Mercantile Exchange. The April contract gained 32¢ to $90.79/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 28¢ to $90.99/bbl. Heating oil for February delivery increased 0.74¢ to $2.53/gal on NYMEX. The February contract for reformulated blend stock for oxygenate blending (RBOB) inched up 0.71¢ to $2.33/gal.
The February natural gas contract climbed 11.2¢ to $8.10/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., gained 7.5¢ to $7.92/MMbtu. The February gas contract price was up moderately Jan. 29 in premarket trading at NYMEX on expectations that the scheduled Jan. 31 report on the withdrawal of gas from US underground storage "may approach record levels," said Raymond James analysts.
In London, the March IPE contract for North Sea Brent crude was up 48¢ to $91.38/bbl. The February gas oil contract lost $2.50 to $795.25/tonne.
The average price for OPEC's basket of 12 reference crudes gained 13¢ to $87.18/bbl on Jan. 28.
Contact Sam Fletcher at [email protected].
