Oil Prices Rise for 7th Straight Week on Rising Military Conflicts in Ukraine

Verified By Raqueem Khan
Edited by Vani Rao

Natural gas prices fall on prospects of better climate in US

On Friday, 28 February 2014, the US crude April futures gained 0.19%, or $0.19 cents, to end the week at $102.59 a barrel. The light sweet crude rose 0.38% during the week, the seventh consecutive weekly gain and 4.62% in the last one month, the biggest monthly gain since August 2013.

Source: Bloomberg
Source: Bloomberg

Crude oil gained as the US dollar weakened against the six major global currencies. The US dollar index fell 0.6% on Friday, 28 February 2014, to end the day at 79.81, the lowest since December 18. The greenback was trading at a six-month low against the Euro after the European Central Bank announced higher-than-expected inflation of 0.8% in the Euro zone. The monthly oil price was boosted by frigid US climatic conditions and a fall in Cushing crude oil inventory.

The Commodity Weather Group LLC has predicted freezing temperature across north-east and central US, boosting crude oil prices on Friday. The Friday’s gains was cut short after the US Bureau of Economic Analysis revised down its fourth-quarter gross domestic product to 2.4% from previous estimate of 3.2%.

On Friday, 28 February 2014, Brent crude oil April futures rose 0.1% to close the week at $109.07 a barrel. Brent crude fell 0.71% during the week, but posted monthly gains of 2.48% in February 2014. The spread between the Brent and the WTI crude contracts fell to $6.87 a barrel trade at Friday’s close.

Source: Bloomberg
Source: Bloomberg

In the upcoming week, all eyes will be on the US Labor Department’s announcements on non-farm payrolls, an indication of the recovery in the US labor market, which will guide future monetary policy. The Bloomberg median estimate on change in non-farm payrolls stands of 150,000. On Monday, HSBC and Markit will release data on manufacturing sector activity in China, the world’s largest crude oil importer.

On Monday, March 3, 2014, the crude oil prices surged amidst mounting geopolitical conflicts between Ukraine and Russia, the world’s largest oil and gas exporters. Russia has mobilized its military in Ukraine, seizing control of the Black Sea region. Even though there have been supply constraints, there are fears of reduced oil and gas supply through Ukraine, which is the main channel for Russian gas to be supplied across Europe.

The New York Mercantile Exchange (NYMEX) traded WTI crude rose 1.53% to $104.17 and the Brent crude advanced 1.49% to $111.30 a barrel on the ICE Futures Europe exchange at the time of reporting.

The WTI and Brent crude were last trading at $103.85 and $110.76 per barrel, respectively, at the time of reporting.

Natural Gas

US natural gas rose more than 2% on Friday, 28 February 2014, following forecasts of frigid winter temperature and snow across the central and northeastern part of US for the next two weeks. The natural gas April futures rose 2.17%, or 9.8 cents, to end the month at $4.609 per British Thermal Unit (BTU) on Friday.

Source: Bloomberg
Source: Bloomberg

For the week, the natural gas prices nosedived 24.87%, the highest weekly fall since December 1996, on reports of milder winter conditions. For the month, natural gas prices cooled off 5.5% after hitting a five-year high of $6.493 per BTU on February 20, 2014.

According to the US Energy Department, approximately 52% of US households use natural gas from November through March for heating purposes, and this is considered the peak season for gas consumption.

The US had total gas reserves in the range 140-174 billion cubic feet during the week, above 149 billion cubic feet levels in the year-ago week and above the five-year weekly average of 105 billion cubic feet.

Natural gas prices rose 2.75% to $4.736 per million BTU on the NYMEX on Monday after reports of possible Russian invasion in Ukraine. Russia supplies a majority of its gas to the European nations through Ukraine. There are fears of Ukraine curbing the supply of Russian gas through its territory to the rest of Europe.

US natural gas was last trading at $4.717 per million BTU at the time of reporting.

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