OIL FUTURES: Nymex Crude Hits $59.00, New 4-Week High February 2, 2007Posted by notapundit in Economic News.
NEW YORK (Dow Jones)–Crude oil futures finished above $59.00 for the first time this year on Friday, extending a rally that started in late January with the arrival of cold weather in the Northeast.
Concern that below-normal temperatures gripping the region will boost heating oil demand and cut into inventories combined with worries over supplies in key oil producing countries to give prices a late lift after a decline Thursday.
“The oil market rally is being driven by the fear of the unknown over the weekend, whether it’s the weather or the geopolitical risks,” said Phil Flynn, a trader and analyst at brokerage Alaron Trading Corp. in Chicago.
The front-month March crude contract on the New York Mercantile Exchange rose $1.72 to $59.02 a barrel, the highest level for a front-month contract in nearly four weeks.
For the week, crude gained $3.60, or 6.5%, its biggest weekly gain in two months.
March Brent rallied $1.69 to $58.41 a barrel on ICE Futures.
March heating oil rallied 2.51 cents to $1.6840 a gallon. March RBOB gasoline added 4.76 cents to $1.5729 a gallon.
The rally came as traders closed bearish positions, or bets on falling prices, and established new bets that prices will rise again, boosted in part by continued cold weather along the East Coast.
The National Weather Service’s latest 8- to 14-day outlook, issued Thursday, calls for below-average temperatures in most of the Midwest and the Northeast, the nation’s largest heating oil consuming region.
While temperatures are expected to rise to more normal levels by the middle of the month, forecasters expect a generally colder-than-average February in much of the Northeast and Mid-Atlantic, the world’s largest heating oil consuming region.
Traders “have forgotten what kinds of price spikes are possible, not just on the forecasts for cold but during the cold itself,” said Tim Evans, an energy analyst at Citigroup in New York. “Prices can have even a further opportunity to climb to new highs or retest the highs on the cold itself.”
The threat of an oil strike in Nigeria, Africa’s largest oil producer, and mounting tensions between the U.S. and Iran, the Persian Gulf’s second largest producer, contributed to Friday’s rally.
In Nigeria, the country’s two main oil workers’ unions on Thursday threatened a strike next week to protest against rising violence in the petroleum-producing southern region.
Dozens of workers, foreign and Nigerian, have been seized in attacks in the Niger Delta region in recent weeks, and the unions said they would protest by a work stoppage beginning Monday. Nigeria is Africa’s largest oil producer.
A top Iranian nuclear official said Friday that U.N. inspectors have set up cameras in an underground nuclear facility, amid concern that Iran was obstructing international inspections.
The U.S., charging that Iran intends to produce nuclear weapons, has turned up the heat on Tehran in recent weeks, raising fears of an imminent military confrontation between the two countries.
Following are prices for selected Nymex and ICE contracts and their comparison to values at the prior day’s settlement. Highs and lows include levels hit in overnight trade.
Prices for crude oil are in dollars a barrel and the change is in cents; prices for Nymex products are in cents a gallon and the changes are in points; prices for ICE gasoil are in dollars a ton and the change is in cents.
Contract Settle Change Vs Low High
Mar crude oil 59.02 +172 57.05 59.10
Apr crude oil 59.73 +171 57.88 59.78
Mar heating oil 168.40 +251 163.90 168.50
Apr heating oil 168.70 +275 164.10 168.93
Mar RBOB 157.29 +476 152.00 157.70
Apr RBOB 171.29 +431 166.30 171.31
Contract Settle Change Vs Low High
Mar ICE Brent 58.41 +169 56.65 58.50
Apr ICE Brent 59.31 +169 57.51 59.38
Feb gasoil 509.50 -525 507.75 517.50
Mar gasoil 513.50 -475 512.00 520.25
By Masood Farivar, Dow Jones Newswires