- NYMEX crude up 70 cents to $71.89
- NYMEX natural gas (Henry Hub) down 11 cents to $5.401
- NYMEX refined gasoline futures up at $1.8940
- All three commodities still trading under March front-month
contract
Reversing a steep sell off after three consecutive sessions on
the downside, crude oil futures on the New York Mercantile Exchange
saw an uptick in trading Monday as concerned investors abandoned
the dollar's safe havens to bet on riskier markets.
As the U.S. currency weakened today, the price of light, sweet
crude oil for March delivery added 70 cents to Friday's lower price
tag to settle higher at $71.89 a barrel. On the opposite side of
the energy coin, March natural gas spot prices at the Henry Hub
retreated by 11 cents to $5.40 per thousand cubic feet.
Helping to spur prices in the oil complex, a bout of
unseasonably cold weather is forecast to drop temperatures across
the Midwest and Northeast this week. According to the National
Weather Service, heating oil demand should be 11.5% above
normal.
Moreover, international demands to sanction Iran, as well as an
additional attack on a Shell-operated oil pipeline in Nigeria,
accelerated short covering for NYMEX oil futures.
Arguably triggering a free-fall, domino effect across the
commodities spectrum last week, the equities market lost further
ground today as traders on Wall Street eyed the euro zone's
financial struggles. Both the Dow and S&P 500 indexes ended
down on the session.
"Last Friday, you had such a sharp sell off [in crude], but
underlying the market, not a whole lot has changed," said Bill
O'Grady, the chief markets strategist at St. Louis-based Confluence
Investment Management, LLC.
"The situation of the markets when prices were above $80 is
about the same as it is now that we're in the low $70s, and every
time we dip under the latter, you start to see more buying coming
in, which is very typical of a range-bound market," the analyst
explained.
O'Grady did point to colder weather as an impetus for higher
energy prices in general, but conceded that this factor does not
necessarily provide a substantial amount of support for oil in
particular.
Also climbing alongside crude oil today, NYMEX gasoline futures
for March delivery closed slightly higher to $1.89, or just under
its recent $2-threshold.
"Gasoline consumption usually picks up in [late February] when
it makes its seasonal trough and rises steadily into summer,"
O'Grady noted.
"However, the economic recovery is still slow and even with the
recent drop in the unemployment rate, labor markets are still
relatively depressed, so I suspect we will follow last year's
demand pattern where we did see some increases, but it will
probably still be below normal," the analyst predicted.
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