Commodity Corner: Oil Drops to 8-Week Low
Crude futures fell to an eight-week low Thursday, creating a record disparity between the U.S. and London benchmarks. Light, sweet crude on the New York Mercantile Exchange (NYMEX) dropped 1.9 percent to $85.63 a barrel. In contrast, London's Brent soared at $97.35 on the ICE futures exchange.
The $11.83-gap between the Brent and NYMEX contracts Thursday was the highest difference ever. The two contracts usually trade within $2.00 of one another. Analysts believe investors are purchasing Brent benchmarks due to the surpluses in oil supplies at the NYMEX price settlement point in Cushing, Okla.
Also pressuring oil futures downward was the weekly U.S. Department of Labor report of first-time claims for unemployment insurance. According to the agency, first-time jobless claims shot up 2.7%, or 51,000, last week Meanwhile, the number of people continuing to collect unemployed insurance benefits increased by 94,000 to 3,991,000 for the week ending Jan. 15.
Crude ended Thursday's trading session at $85.64 a barrel, after fluctuating between $85.42 and $87.66.
The Energy Information Administration's (EIA) inventory report Thursday contributed to a 3.9-percent decline in front-month natural gas. Gas settled at $4.32 per thousand cubic feet after trading from $4.29 to $4.74.
Natural gas inventories for the week ended Jan. 21 stood at 2.542 trillion cubic feet, according to the EIA. Stockpiles decreased by 174 billion cubic feet (Bcf), exceeding the 152-Bcf five-year average.
Despite the cold winter, analysts blame the decrease in futures on a surplus of stockpiles in U.S. storage.
Likewise, reformulated gasoline blendstock (RBOB) also fell Thursday. It settled at $2.38 a gallon. The intraday range for gasoline was $2.38 to $2.44.