West Texas Intermediate crude rose to the highest level in almost three weeks and was set for a second weekly gain as supplies at the biggest US storage hub fell to a two-year low and a possible escalation in tension surrounding Ukraine threatened to curb energy exports from Russia. A brighter economic outlook in the US also supported the oil market. Meanwhile, natural gas futures declined.
On the New York Mercantile Exchange, WTI crude for delivery in May traded at $102.20 per barrel at 13:44 GMT, up 0.91% on the day. Prices shifted in a daily range between $102.23, the highest since March 10, and $101.18 per barrel. The contract rose by 1% yesterday to settle at $101.28 a barrel, the highest close since March 7th.
Meanwhile on the ICE, Brent futures for settlement in the same month stood at $108.32 a barrel, up 0.45% on the day. Prices held in a daily range between $108.33, the strongest since March 17, and $107.62 per barrel. The European crude benchmark rose by 0.75% on Thursday to $107.83 a barrel, set for its first weekly advance in five, up 0.8% on the week so far. Brent’s premium to its US counterpart narrowed to $6.25 from Thursday’s close at $6.55.
The oil market continued to draw support by a brighter US economic outlook and as supplies at Cushing, Oklahoma, the biggest US storage hub and delivery point for NYMEX-traded contracts, extended their drop to a new two-year low.
The US economy expanded at a 2.6% annualized rate in the final three months of 2013, slightly below analysts’ expectations of a 2.7% gain, but up from a preliminary estimate of 2.4%, a report by the the Bureau of Economic Analysis showed. The US gross domestic product grew by 4.1% in the third quarter.
Also aiding oil prices, the recently receded fears of an escalation in tension between Russia, the world’s biggest oil producer, and the West were renewed after the US and the EU agreed on Wednesday to work on preparing possible tougher economic sanctions against Russia, including its energy sector, and also reduce Europe’s dependence on Russian energy exports.
Meanwhile, on the New York Mercantile Exchange, natural gas for delivery in May traded at $4.516 per million British thermal units at 13:46 GMT, down 0.47% on the day. Prices held in a daily range between $4.567, the highest since March 17, and $4.484 per mBtu. The contract was poised for a 5% gain this week, snapping two 5-day periods of losses.
The energy source added as much as 3.3%, the most since February 19, following a bullish government report. The Energy Information Administration reported yesterday that US natural gas inventories fell by 57 billion cubic feet in the seven days through March 21st, more than analysts’ median forecast of a 52 million cubic feet drop and compared to a withdrawal of 90 billion cubic feet the same week a year ago. However, the decline was more than 8 times larger than the five-year average drop of 7 bcf during the comparable period.
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