The American Petroleum Institute reported yesterday that crude stockpiles dropped by 2.3 million barrels last week, affected by rising demand levels after heavy snow covered large regions in the US.
Meanwhile, the ongoing depletion of stockpiles last week is reflecting strengthening demand levels on the black gold, after the US economy showed signs of recovery from the worst economic crisis since World War II.
The cold weather is still dominating the U.S, where temperatures remain within a normal range in the north-eastern region –accounting for nearly four-fifths of the overall heating oil consumption- where experts expect temperatures to remain as is until January 15.
Furthermore, temperatures in the northern hemisphere dropped into negative levels below zero, especially in Europe and China, where temperatures in Beijing yesterday reached -20 degrees Celsius. Temperatures are expected to also plunge in northern China to -32 degrees Celsius tomorrow, therefore making this snow storm the worst witnessed for over half a century.
The drop in temperatures is supporting demand on heating contracts that increased by 11%, compared to last year’s levels, where it will be insured by the EIA report that is expected to be released sometime later on today. Expectations are for a drop of 0.4 million barrels, compared to the previous week’s drop by 1.5 million barrels.
Heating oil contracts for December delivery plummeted in NYMEX to record $2.19 per gallon (0.52 cents); meanwhile, motor gasoline fell by 1.2 cents to record $2.11 per gallon; however, natural gas contracts rose by 4.8 cents to close at $5.69 per 1000 cubic feet. As for London trading, Brent contracts for December delivery gained by 5 cents to record $80.64.
The S&P GSCI index closed yesterday at 538.477, higher by 0.534 points; meanwhile, the S&P GSCI energy index gained to close at 273.135 after inclining by 0.257 points.
In addition, crude contracts for February delivery opened today at $81.40 per barrel, recording its highest at $81.85 and lowest at %81.40 per barrel, where it is currently trading around $81.60 per barrel.