Cold Weather Freezes EIA Reports, Lifts Oil Complex

Crude oil futures on the New York Mercantile Exchange ultimately reversed a negative movement on Wednesday to close its session above $74 a barrel alongside Wall Street's rally on news that the euro zone intends to rescue Greece from financial disaster.

After tumbling to a low of $72.60, the price of light, sweet crude oil for March delivery gained nearly $2 to close its session at $74.52 on the NYMEX. Likewise, natural gas spot prices at the Henry Hub for March delivery posted a positive movement up to $5.29 per thousand cubic feet.

Today, reports that France and Germany would tomorrow present a plan to bail out cash-strapped Greece spurred investors away from the greenback's safe havens and into riskier markets. Both dollar-denominated NYMEX commodities, as well as the equities market, were lifted by the near term bullish news.

Helping to lift crude futures further, the U.S. Energy Information Administration raised its world oil demand forecast for the year. According to the EIA's Short-Term Energy Outlook, the crude oil market is expected to strengthen once more during spring with WTI rising to an average of about $81 per barrel over the second half of this year and $84 per barrel in 2011.

Additionally, the EIA delayed its weekly petroleum inventory and natural gas storage reports due to inclement weather in the U.S. Northeast until Friday.

On Tuesday, however, the American Petroleum Institute forecasted a larger-than-expected increase in domestic crude oil stockpiles in the week to Feb. 5. The API also sees gasoline inventories up and distillate stocks down for the previous week.

Specifically, a consensus survey out of Reuters predicts that crude inventories will be up by 1.5 million barrels; distillates will be down by 1.9 million barrels; and gasoline supplies will have risen by 500,000 barrels.

"The market seemed to be a bit uncertain today," stated Phil Flynn, senior analyst at Chicago-based PFG Best. "The delay of today's EIA report because of the snow storm probably led to a lighter-than-normal trading volume, which allowed the heating oil market to carry the complex away later on in the day," he added.

The analyst also pointed to the U.S. currency's earlier strength following Federal Reserve Chairman Ben Bernanke's plan to decrease economic stimulus as a main impetus in the drop down in prices at the start of the session. However, Flynn noted, oil prices did and have continued to rebound on this week's talk surrounding Greece's fiscal health.

"Ultimately, this shows you what is driving the price of oil -- it's what's been happening in the central banks and in the global economy," the analyst revealed. "The big picture of this market is that it's driven by macroeconomics."