New York oil ended a four-day rally on Wednesday that had pushed prices up $3 a barrel. Bad economic news and a report that the Seaway pipeline from the Cushing, Okla. storage facility to the Gulf coast was restricted due to “unforeseen constraints” to 175,000 b/d was behind the shift . This news, along with profit taking, an IMF cut in its projection for world economic growth, and concerns that US inventories might increase this week took prices down 1.5 percent to close at $95.23. Speculators around the world had open futures contracts banking that the WTI-Brent spread would continue to shrink. The restriction on the Seaway pipeline caused many to unwind this spread, sending Brent up 38 cents to close at $112.80 and the spread back up $17.57 a barrel.
This week’s stocks report was delayed until Thursday due to the holiday. The API, however, reported oil inventories increased by 3 million barrels last week.
Although US gasoline stocks are thought be at their highest level since records began in 1990, inventories in NY harbor, the delivery point for gasoline futures contracts, inventories are 14 percent below the five year average. This sent gasoline futures up for a fifth straight session to close at $2.83 a gallon, the highest settlement since October 16th and only 10 cents a gallon below the highs seen last March.
A cold snap in Europe has driven up heating oil prices there while US natural gas futures traded around $3.57 per million BTU’s. There is disagreement among US weather forecasters as to whether it will stay cold or get warm in the northeastern US next week.
The US drilling rig count dropped by 12 units last week and is now about 250 rigs lower than at this time last year.
The environment is back into the news with President Obama vowing to make emissions a top priority in the next four years. Nebraska’s governor approved a new construction route for the Keystone pipeline, increasing the pressure on the administration to do the same.
Bombs continue to go off nearly every day in Iraq. The one on Wednesday killed 22 and wounded 50 worshipers at a Shiite mosque north of Baghdad. Concerns are increasing that the Sunni-Shiite animosities, along with prolonged fighting in Syria, will spread into Iraq and threaten the delicate political balance the US left behind, not to mention the prospects for increased oil production.
Some Russians are being evacuated from Syria, but Moscow says most of the thousands of its citizens living in Syria want to remain. Many are women who were married to Syrian men, a popular thing to do during the Soviet period, and are raising families in Syria. The chaos in Syria continues to get worse with food production less than half normal and Sunni vs. Shiite atrocities on the upswing.
