Edited by Vani Rao
Crude oil prices rise 2.05% to hit 10-month high
The WTI crude gained 3.96%, or $4.09 a barrel, during the week ended Friday, June 13, 2014. The light, sweet crude rose to new nine-month high on Friday on concerns of a supply disruption from Iraq, the second-largest Organization of the Petroleum Exporting Countries (OPEC) producer.
On Friday, the WTI crude price edged 0.23% higher, to end the day at $106.91 per barrel as shown below. During the first half of the week, US crude oil fluctuated between $102.81 and $104.49. Later, due to the Iraq crisis, oil prices rose 2.05% to hit a 10-month high of $107.68 a barrel.
Earlier in the previous week, the Islamic State of Iraq and the Levant (ISIS) seized control of Tikrit and Mosul, Iraq’s second-largest city and gateway for the country’s crude oil export. More than three million barrels of oil for export from Iraq comes from the south; if the riot spreads across the south, it will have a huge impact on the oil supplies from Iraq. Globally, the demand for oil has grown from 88.5 million barrels a day in 2010 to 92.8 million barrels a day so far in 2014.
During the week, the Energy Information Administration (EIA) reported that oil inventories fell 2.6 million barrels despite an increase in the imports. Moreover, import prices increased 1.1% so far during June 2014. In another economic data release, the US Department of Labor announced that initial jobless claims rose 4,000 to 3,17,000 for the week ended June 7, 2014.
The Brent crude oil edged 0.34% higher, trading at a nine-month high of $113.41 per barrel on Friday. The crude oil spread between the Brent and the WTI crude narrowed to $6.50 a barrel.
On Friday, June 13, 2014, natural gas gained 0.65%, or $0.05, to end at $4.739 British Thermal Units (BTU), to settle at a four-week high of $4.79 per million BTU. US natural gas price for July delivery edged 0.91% higher. Prices rose due to expected warmer weather, which may result in the usage of more gas for devices such as air conditioners.
According to the EIA, natural gas storage increased to 107 billion cubic feet to 1,606 billion cubic feet in the week ended June 6, 2014. Natural gas consumption in the power industry is expected to increase to 23.0 billion cubic feet per day in 2015, with lower natural gas prices and the retirement of some coal plants. The number of rigs drilling for gas in North America fell by 10 to 310 in the latest weekly report, while oil-directed drilling rigs rose by 6 to 1,542.
Analysts forecast that total coal consumption is expected to decline 3.1% in 2015, due to the implementation of the Mercury and Air Toxics Standards, and growth in power generation from renewable resources (wind, hydro, biomass, geothermal, and solar) by 4.1%.
US Natural Gas was last trading at $4.78 per million BTU at the time of reporting.