Commodity Corner: Oil Falters; Natural Gas Up 5%
According to the U.S. Department of Energy (DOE), crude oil stocks fell by slightly more than one percent last week. However, the January oil futures price declined Wednesday because gasoline inventories during the same period headed in the opposite direction.
Oil settled at $88.28 a barrel, a 41-cent drop from Tuesday, after trading within a range from $87.33 to $88.99. The DOE's Energy Information Administration (EIA) announced that crude oil inventories declined by 3.8 million barrels to 355.9 million barrels as of December 3, 2010.
Dragging down oil was the EIA's report that total gasoline stocks had increased by 1.8 percent to 214 million barrels. The EIA's figure for gasoline—a result of increasing refinery utilization—also contributed to a two-cent decline in Wednesday's front-month gasoline price. Gasoline settled at $2.30 a gallon. It traded from $2.28 to $2.33 during the midweek session.
January natural gas, meanwhile, ended the day five percent higher. Continuing cold weather throughout the U.S., coupled with anticipation that EIA will report a larger-than-expected decline in inventories Thursday, propelled natural gas up 22 cents to settle at $4.61 per thousand cubic feet.
Front-month natural gas peaked at $4.61 and bottomed out at $4.35.