Cold US winter weather across the Midwest and Northwest, where the latter demands 4/5 of the country's heating oil, and this week their average consumption will be 7% above normal average, seemingly the harsh winter did not yet flee the United States after this winter was generally mild according to previous seasons, as global warming takes its toll on natural weather.
The focus now is on Mother Nature, the extent of consumption in the world's largest consumer, especially after recession fears was the reason behind expectations of dampened demand, yet again nature erupt the usual. The rise in April contracts yesterday continued the gains' streak, as it ended up 42 cents to settle at $99.23 basically supported by the rise in crude components. The contract traded all through the session below the psychological three digit mark reaching the highest of $99.70 while the lowest was of $97.75 per barrel.
Heating oil futures for March delivery on Nymex touched its record intraday high since records first began back in 1978 at $2.8005 a gallon, while as for natural gas which is now becoming the cheaper alternative for heating oil, especially with tight pockets in the US as their economy is slowing as so is the labor force, the contract for the same delivery date was up yesterday as well, which until now is up near 18% from a year earlier resembling growing demand.
Oil was little changed in the Asian session this morning as still the cold weather aspects prevail, in addition to expectations that it will affect commercial crude inventories which will be in tomorrow's EIA report. Crude contracts for April settlement reached as high as $99.45 yet as of 8:00 GMT the contract was down 28 cents trading near the lowest set which was at $98.79 per barrel.
Weather conditions provided probably what we can call some serenity in the markets after oil market imputes last week were from all walks of life, geopolitical tension, inflation, and sanctions all dialoged in investors' minds; nevertheless now the conventional theory, which is supply and demand efficiency, is what they are in focus of as the rest is left lingering in the back of their heads.
OPEC's early March Vienna meeting is still a matter of debate as all are in doubt whether the organization will actually pursue cutting production; on that Greenspan, former Reserve Chairman was quoted saying during a speech at the Economic Forum in Jeddah, Saudi Arabia that it is an urgent need to enhance oil output capacity to anchor surging oil prices, and to him that was not enough to combat the rising beast. His call comes along side all consumer nations and even US governmental urges onto OPEC nations to control the rising upheaval. Well to me one thing or the other, production may stay as is yet again will that prevent speculators from creating profit opportunities and from there leading the imbalance!!!