Crude-oil futures will start this week on the backfoot after suffering their first weekly loss in a month last week.
A combination of yet more unsold stocks in the US, an end to the current tensions over Greece, and a ‘weak’ update on US drilling rig use released on Friday night, combined to undermine the recent oil price rally.
That was despite a surge in US natural-gas prices last week as much of America suffered from more below-normal temperatures as snow and ice storms swept across the country. Another round of storms hit the Midwest and east coast at the weekend.
Oil prices were not impacted by the double digit surge in US gas futures prices to $US2.951 per million British thermal units (BTUS), up more than 11c on the day. The price jumped 5.2% over the week but failed to top the $US3 a million BTUs level.
US analysts say that although much of the Midwest and East Coast have been hit by a series of snow and ice storms in the past six weeks, gas supplies (like oil) have continued to rise.
Last week the US Energy Information Agency said the amount of gas in storage hit a five year high last week for the first time in a year as storms and icy weather continued to grip more than a third of the US’s major population centres.
That EIA report last week also helped to inject a note of realism into the oil price, along with a report on stocks from the American Petroleum Institute.
Both showed oil stocks in the US rising by between 7 and 14 million barrels. Both estimates were larger than markets had been expecting.
And on Friday the weekly oil rig use report from Baker & Hughes showed another drop – this time of 37 rigs.
But that disappointed because it was not only less than expected, but half the size of the falls in the previous two weeks or more than 80 rigs.
But it was the 11th weekly fall in the rig count and there’s expectations of more to come. But the reductions are not impacting the surprisingly large rises in weekly stock levels.
So by early Saturday, March oil futures in New York fell 82c, or 1.6%, to settle at $US50.34 barrel.
For the week, the fall was 4.6%, its first loss since the week ended January 23.
The March contract expired closed early Saturday, our time, and the new front-month contract – April crude – was down $1.02, or 2%, to settle at $US50.84 a barrel.
In London, Brent crude oil futures for April was unchanged unchanged Friday at $US60.22 a barrel. But for the week, it fell 2%.
On Comex, gold fell after news of the Greece bailout extension deal was released. April gold futures fell $US2.70, or 0.2%, to settle at $US1,204.90 an ounce, with the contract down 1.8% for the week.
The price dipped further in after hours trading to $US1,293.30 an ounce.
