West Texas Intermediate crude held near Friday’s three-week high close and is set for a quarterly advance as Russia and the West discuss how to defuse growing tension over the crisis in Ukraine, while supply outages from Nigeria and Libya further supported the market. Gains however were capped as Iraq started production at a new oilfield, while the latest data from China due tomorrow may be in line with expectations for an economic slowdown. Meanwhile, natural gas futures declined amid milder US weather outlook.
On the New York Mercantile Exchange, WTI crude for delivery in May fell by 0.13% to $101.54 per barrel by 13:03 GMT, having shifted in a daily range between $101.73 and $101.17 per barrel. The contract jumped by 0.4% on Friday and closed the week 2.2% higher, set for quarterly advance.
Meanwhile on the ICE, Brent futures for delivery in the same month fell by 0.03% to $108.04 per barrel. Prices held in a range between day’s high and low of $108.10 and $107.62 per barrel. The European crude benchmark rose by 0.2% on Friday and settled the week 1.1% higher, trimming its quarterly decline, the first in three. Brent traded at a premium of $6.36 to its US counterpart, down from Friday’s close at $6.40.
Oil prices remained underpinned after rising for a third day on Friday as US Secretary of State John Kerry and his Russian counterpart Sergei Lavrov held talks for four hours in Paris, seeking common diplomatic ground for an exit from the crisis that will best meet the Ukrainian people’s interests. Moscow’s military manoeuvres however kept the markets rattled, with Kerry saying that the diplomatic progress depended on Russia pulling back its 40 000 troops it has deployed near its western border to Ukraine.
The oil complex however was pressured on news that Iraq has began producing at the West Qurna-2 field, which should allow the country to lift its nationwide output to 4 million barrels per day by the end of the year, Iraq’s oil minister said. The field should reach its full capacity of 1.2 million bpd throughout the year, starting with an initial production pace of 120 000 barrels per day.
China’s manufacturing activity is expected to have contracted for a third month in March, according to a private report by HSBC and Markit Economics, while government data is expected to show minor expansion. Both reports are due early tomorrow.
China’s National Bureau of Statistics is expected to report factory activity rose to 50.3 this month, up from 50.2 in February, while the HSBC Manufacturing Purchasing Managers’ Index likely remained flat at 48.1, signaling contraction for a third straight month.
Meanwhile, on the New York Mercantile Exchange, natural gas for delivery in May traded at $4.448 per million British thermal units at 13:05 GMT, down 0.84% on the day. Prices held in a daily range between $4.485, and $4.441 per mBtu. The contract snapped two weeks of declines, as it added 4% last week, following a bullish government gas storage report.
While one spring storm moves out of the Northeast, a new one will be spinning up over the northern Plains and sweeping through the central US, NatGasWeather.com reported on March 31. The latter will bring a surge of milder temperatures into the eastern US over the next few days, significantly easing natural gas and heating demand.
After several days of milder conditions over the Midwest and Northeast, chilly temperatures will return Wednesday into Thursday, but the cool down will be brief as late in the week, another fairly strong storm develops and tracks across the central US and the Northeast, bringing above-average temperatures.
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