U.S. Crude Futures Top $100/bbl
NYMEX-traded crude oil futures settled above US$100 per barrel (/bbl) on Monday – the highest close this year to-date – as investors awaited cues from the new head of the Federal Reserve on the course of the central bank’s monetary policy. Fed chairwoman Janet Yellen is scheduled to deliver her first testimony to Congress this week, and markets generally expect her to indicate she will stay the course on the agency’s bond-buying program. West Texas Intermediate (WTI) for March delivery tacked on 18¢ to close at $100.06/bbl. In European trading, Brent crude tumbled by nearly $1/bbl, pressured by sinking heating oil prices and as supplies increased from Libya and the North Sea. Intense and relentless cold had propped up oil prices recently as demand for heating fuels skyrocketed and refiners pumped out distillates. Temperatures are expected to moderate next week, curbing demand, even as another snowstorm is forecast in the U.S. Northeast later this week. After establishing an intra-day high of $109.75/bbl – its loftiest since January 2 – prompt-month March Brent ended 94¢ at $108.63/bbl. The March contract expires at the end of floor trading on Thursday. April Brent settled at $107.96/bbl, down 89¢.
Natural Gas Extends Previous Losses
U.S. natural gas futures fell on Monday for a fourth straight session on milder short-term weather outlooks. Frigid temperatures are expected to continue in the heavily-populated Midwest to the Great Lakes region during the next five days before much of the country warms over the next week or two. NYMEX-traded gas for March delivery erased another 19.6¢, or 4.1%, to settle at US$4.58 per million British thermal units (/mmBtu). Including Monday’s decline, the front-month contract has fallen 20% since its highest trade of $5.73/mmBtu last week as traders have taken profits following the steep rise triggered by this year’s unusually cold weather. Traders closely monitored the spread between the March and April contracts, since longer-term forecasts suggest a milder trend. The March-April spread is known as a “widow-maker” spread because of its potential trading risks. Elsewhere, early consensus estimates for the week ended February 7 predict a drawdown in natural gas stockpiles of between 197 billion cubic feet (Bcf) and 270 Bcf – well above the year-ago and five-year averages for that week.
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