Oil Prices Fell Below $97 per Barrel amid Strong US Demand

Oil prices per barrel posted a recent decline of below $97 in the midst of mixed indications of a strong demand for crude in the United States, the biggest economy of the world.

In Europe, the latest benchmark crude oil price for delivery in March declined by $1.05 to reach $96.56.  In New York Mercantile Exchange’s electronic trading, prices also reduced by 87 cents to end at $97.61.

In London’s ICE Futures exchange, Brent crude prices rose by 21 cents to finish at $111.77 per barrel.

A rise of 4 million barrels in the supply of crude in the United States during the past week shows a sluggish consumption of oil. But, according to the Institute for Supply Management, factories had the highest increase in their output in the month of January within a 7-month period. In December, construction spending also increased by 1.5%, its fifth consecutive monthly gain, said the Commerce Department.

Analysts noted a decrease in the difference between Brent and Nymex with the American contract. That is attributed to the increased inventories, the European contract strengthened by doubts over the Iranian sanctions and conflict and the 10-month uprising against the Syrian regime.

Frankfurt’s Commerzbank analysts report that it is becoming apparent that there is no shortage in supply at present and that Brent oil price history is primarily being supported by a risk premium.

Oil prices have reached almost $100 in the past several months in the midst of various economic indications in Europe, Asia and the United States. Gasoline futures closed at just above $2.87 a gallon, down $1.95. Some analysts anticipate crude to start rising as growth in the global economy is probable this year than what was expected in the past.

Barclays capital expressed in a report that the crude oil prices have stayed fixed in a really long duration of restricted sideways trading. But, the market is presently beginning to place itself for a beneficial break according to a bigger relaxation degree regarding macroeconomic prospects.

By Chris Termeer