Picking up steam on the heels of frost-biting conditions in the U.S., crude oil futures rallied on the New York Mercantile Exchange Wednesday, as gains were extended by government data underscoring an additional draw in domestic crude and fuel stockpiles.
Rising for the sixth consecutive session on the NYMEX, the price of light, sweet crude oil for February delivery added 41 cents to yesterday's settlement, ultimately closing just under the $80-threshold at $79.33 a barrel.
Interestingly, the U.S. dollar did little to hold down oil's gains after topping its highest level since late September against the Japanese yen today. A stronger greenback usually puts pressure on energy prices as its denominated commodities are riskier to acquire when the dollar packs a bigger punch.
On the other side of the coin, natural gas spot prices at the Henry Hub for February delivery fell once more after today's volatile trading for the energy commodity to a final price tag of $5.709 per thousand cubic feet.
Oil Bulls Eye Colder Weather, Drop in Stockpiles
"The enduring cold weather has gone a long way -- although not fully correcting -- but certainly making a significant dent in the massive overhang that we had in distillate fuels," noted Bill O'Grady, the chief markets strategist at St. Louis-based Confluence Investment Management LLC.
"It looks as if refiners are deliberately keeping production down and restricting imports as a way of getting the product inventory overhang addressed, and the cold weather is helping in that process," the analyst added.
Furthermore, O'Grady pointed to "the certainties and unknowns" surrounding geopolitical concerns also spurring investors' risk appetite to purchase commodities as hard assets.
Specifically, oil prices have spiked during the past few sessions due to political and civil unrest in Iran, which could potentially impact oil supplies streaming out of the OPEC-member country.
An additional impetus for today's higher oil price, the U.S. Energy Information Administration released its weekly inventory report today, which showed a drop in crude oil stockpiles by 1.5 million barrels in the week to Dec. 25. Distillate stocks were down by 2 million barrels as fuel demand burned brighter in the U.S. Northeast -- notably the world's largest heating oil market -- and as temperatures have been unseasonably cold.
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