U.S. Crude Futures Gain on Equities, Ukraine
NYMEX-traded crude oil futures gained nearly 2% on Tuesday, with some analysts attributing the price strength to news on the expansion of a key U.S. pipeline, as traders looked to the week’s supply reports and the conclusion of the Federal Reserve’s policy meeting to help gauge oil’s next move. Upside momentum also came from U.S. equities, which showed strong gains in all 10 primary S&P 500 sectors. West Texas Intermediate (WTI) for April delivery settled $1.62 higher at US$99.70 per barrel (/bbl). London-traded Brent North Sea crude was bolstered by concerns over violence in Crimea. Markets took confidence from comments by Russian President Vladimir Putin that he would not seize other regions of Ukraine outside Crimea, but a Ukrainian serviceman was later killed after his base came under attack – indicating the crisis was still volatile. Prompt-month April Brent closed up 55 cents at $106.79/bbl, after hitting a six-week high low on March 17. Brent’s premium over WTI narrowed to $7.09/bbl, from $8.16/bbl in the previous session.
Natural Gas Slides on Mixed Weather Forecasts
U.S. benchmark natural gas futures retreated 1.8% on Tuesday with forecasters calling for less cold weather and lower heating demand over the next couple of weeks. NYMEX-traded natural gas for April delivery settled down 8 cents at US$4.456 per million British thermal units (/mmBtu). The April contract moved in a 10-cent range around technical support at $4.50/mmBtu, while traders await clarity on weather and storage fundamentals. Investors are attempting the discern the fair value of gas during the shoulder season without having a clear idea of what the weather will be like, the final storage deficit or the extent of fundamental factors such as production or power generation demand, according to market observers. Despite Tuesday’s decline, the front-month gas contract is still up 5.3% since the start of the year.
Most forecasts call for mild weather throughout much of the U.S. over the next five days, with cold returning over the next six to 10 days in the eastern two-thirds of the country and cold in the North over the next 11 to 15 days.
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