Oil settles higher, U.S. crude surges 5.9 percent in Q1

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Crude futures rose on Thursday, the last session of the first quarter, in choppy trading with stronger Wall Street equities and a weaker dollar supporting dollar-denominated oil prices.

Brent crude futures slipped nearly 1 percent in the first quarter, extending a 1 percent slide in the fourth-quarter of last year. Brent averaged just under $112 a barrel in 2012, the highest ever average annual price.

U.S. crude futures jumped 5.9 percent in the quarter after dipping 0.4 percent in the final quarter of 2012.

U.S. share prices rose as the S&P 500 pushed just above its record closing high during the session, a level that has acted as a significant resistance point in recent weeks. The S&P gained 10 percent for the quarter.

The dollar index was weaker on Thursday and the euro rose against the U.S. currency in what analysts called a tenuous rebound as investors remain cautious about the financial problems in Cyprus and Italy's political gridlock.

"Most of the complex continued to advance with WTI reviving an upside leadership role with assistance from stronger equities and weaker dollar," Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois.

Brent May crude rose 33 cents to settle at $110.02 a barrel, near its $110.10 session peak and above the 200-day moving average ($109.96).

Brent posted a second straight loss for the month, slipping 1.2 percent in March, even though it posted a week-on-week gain of 2.2 percent, snapping a string of two consecutive weekly losses.

U.S. May crude rose 65 cents to settle at $97.23 a barrel, rallying late in the session. The $97.35 session peak was the highest price since mid-February.

U.S. crude had a fourth straight week-on-week gain, up 3.7 percent, and finished March up 5.6 percent for the month.

Crude futures markets will be shut on Friday, observing Good Friday ahead of the Christian celebration of Easter on Sunday.

The divergent price trends for Brent and its U.S. counterpart were evident in the diminished premium for Brent, with the spread between the two futures contracts shrinking to end at $12.79 a barrel based on settlements.

The spread shrank to $12.48 a barrel during the session, its narrowest since early July.

Brent's slide in the quarter and U.S. crude's robust performance reflected the difference in sentiment about the gloomy outlook for Europe and a U.S. economy showing signs of improving growth.

Revived North Sea production also helped curb Brent prices, while improving transport for crude oil from the U.S. Midwest to the Gulf Coast helped the spread between the two crude oil contracts narrow after reaching a 2013 peak of $23.45 on Feb. 8.

U.S. initial jobless claims rose more than expected last week, but have trended lower this year and other data released on Thursday showed the economy expanded more in the fourth quarter than the government had previously estimated.

A gauge of business activity in the U.S. Midwest was not supportive, with the Institute for Supply Management-Chicago business index falling in March, indicating slower growth.

APRIL REFINED PRODUCTS CONTRACTS EXPIRE

U.S. April refined products contracts expired on Thursday and April RBOB gasoline futures fell 1.01 cents to settle at $3.1054 a gallon, with the need to sell winter grade gasoline ahead of the seasonal specification change and generally tepid U.S. demand weighing on prices, traders and brokers said.

But gasoline jumped 10.4 percent in the quarter, aided by a more than 6 percent hike in March. Gasoline futures slid 15 percent in the previous quarter.

U.S. heating oil, the benchmark distillate contract, was little changed on Thursday as the April contract went off the board down 0.02 cent at $2.9152 a gallon.

The May and June contracts rose about a penny, supported by this week's government inventory report showing U.S. stockpiles dropped 4.5 million barrels last week, with demand over the previous four weeks up 5.8 percent from the year-ago period.

Heating oil futures dropped 4.2 percent in the first quarter, and nearly 2 percent in March, not an unusual trajectory for the product as the winter heating fuel season begins to fade. (Additional reporting by Julia Payne in London and Manash Goswani in Singapore; Editing by Bob Burgdorfer)



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