Commodity Corner: Oil Edges Upward; Natural Gas Flat
Trading in oil and natural gas Wednesday offered a useful illustration of how divergent factors affect commodity prices.
In the case of April crude oil, fears that ongoing protests in Bahrain will spill over into neighboring Saudi Arabia caused oil to surge to $99.60 a barrel during the midweek session. The prospects for a peaceful resolution in the tiny island nation dimmed Wednesday amid reports that a crackdown on anti-government protesters led to at least two deaths.
Tugging oil downward, however, was what government officials worldwide are characterizing as a deteriorating situation in Japan. Officials from the U.K., Germany, Australia, and other countries are urging expatriates to leave Japan.
The head of the U.S. Nuclear Regulatory Commission, meanwhile, has opined that Japan's government has downplayed the severity of the condition of nuclear power plants damaged by last week's massive earthquake and tsunami. A high-level French official's blunt assessment Wednesday of the nuclear crisis—that the Japanese government has lost control of the situation—had a particularly unnerving effect on markets and prompted a selloff.
April oil settled at $97.98, translating into a net 80-cent gain for the day. Oil bottomed out at $96.22 during the session.
Natural gas for April delivery remained flat Wednesday at $3.94 per thousand cubic feet. Balancing out the anticipated increase in natural gas demand stemming from an uptick in Japanese LNG spot cargo purchases were the downward pressures of milder U.S. weather conditions and abundant supply.
Front-month natural gas traded within a range from $3.90 to $4.015 Wednesday.
April gasoline gained four cents to end the day at $2.84 a gallon. Gasoline futures fluctuated from $2.77 to $2.88.