OIL PRICES UP $2
Crude oil prices soared by more than $2/bbl on both the New York and London markets Feb. 3, which analysts attributed to a sliding dollar. The oil price rally came despite a bigger-than-expected gain in US crude oil supplies.
The Energy Information Administration estimated US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, increased 7.8 million bbl for the week ended Jan. 29 compared with the previous week. The latest total was 502.7 million bbl, the Petroleum Status Report said.
Analysts said traders and investors appeared more focused on currency rates than on the inventory numbers.
The Wall Street Journal Dollar Index, which tracks the dollar against a basket of 16 other currencies, dropped 1.7%, the largest one-day drop since March 2015. Oil trades in US dollars so a weaker dollar makes oil less expensive for buyers using other currencies.
Ole Hansen, Saxo Bank head of commodity strategy, said the US Federal Reserve appears to be reassessing how fast it might hike interest rates.
"The struggling US oil and gas sector was a major contributor to slowing US growth," Hansen said. "It's now leading to a quiet shift among...policymakers as to how aggressive the Fed will be on future rate hikes."
Hansen said Fed Vice-Chairman Stanley Fischer has said the US economy could suffer if the recent volatility in financial markets persists and triggers a slowdown in the global economy.
"Instead of expecting four US rate hikes this year, we could now see the Federal Open Market Committee consensus move towards two or three rate rises at the coming meetings," Hensen said.
Separately, EIA estimated 2.934 tcf of natural gas in underground storage across the Lower 48 as of Jan. 29, representing a net decline of 152 bcf from the previous week.
Stocks were 490 bcf higher than last year at this time and 445 bcf above the 5-year average of 2.489 tcf, the Gas Storage Report said.
The March crude oil contract on NYMEX increased $2.40 to settle at $32.28/bbl on Feb. 3. The April contract climbed $2.25 to $33.86/bbl.
The NYMEX natural gas contract for March gained 1.3¢ to a rounded $2.04/MMbtu. The Henry Hub gas price was up 3¢ to $2.06/MMbtu on Feb. 3.
Heating oil for March delivery rose 6.8¢ to a rounded $1.08/gal. The price for reformulated gasoline stock for oxygenates blending for March was up 1.3¢ to a rounded $1.01/gal on Feb. 3.
The April ICE contract for Brent crude soared $2.32 to settle at $35.04/bbl on Feb. 3, and the May contract climbed $2.28 to settle at $35.75/bbl. The ICE gas oil contract for February was $304.25/tonne, up $13.25.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 benchmark crudes for Feb. 3 was $28.36/bbl, down 27¢.
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