An easing of the crisis in
Europe
gave energy markets a firm tone last week that enabled crude oil futures to
gain nearly 8% amid mixed economic news and some concerns about supply.
A strike at French oil refineries lifted prices to a
five-week high Friday, with the benchmark West Texas Intermediate finishing the
week at $79.81. The French strike threatened to limit
U.S.
imports of refined products from
Europe.
Earlier in the week, the show of solidarity by European
Union governments regarding fiscal problems in Greece and other countries in
the eurozone, eased concerns about the crisis there and downward pressure on
the euro.
A move Thursday by the Federal Reserve to raise the discount
rate – the rate it charges banks for emergency loans – did however propel the
dollar higher against the euro. News on Friday that the core inflation rate in
the U.S. actually fell 0.1% in January – the first decline since 1982 –
dispelled worries that the Fed would need to tighten further interest rates to
combat inflation and led to a lower dollar on Friday.
The weak consumer price index and another weekly increase in
jobless claims provided further evidence that
U.S.
economic recovery continues to be weak.
The weekly report on oil inventories, coming a day late
because of the Monday holiday in the
U.S.,
showed increases in crude oil and gasoline stocks but a bigger-than-expected
drop in distillates, which includes heating oil. This news buoyed crude oil
prices.
A coup in African oil producer
Niger
on Thursday added to some supply concerns at the end of the week to support
higher crude oil prices.
Hedge funds and other speculative traders sharply increased
their net long positions in crude oil futures in the week ending Feb. 16,
according to trading data from the Commodity Futures Trading Commission, after
having reduced them in the previous week.
Andrew Hall, the head of Phibro, is seeking new investors as
he reorganizes his hedge fund operations in the wake of Phibro’s move from
Citigroup to Occidental Petroleum. Hall, who specializes in energy trading,
will manage the new Astenbeck Capital Management, named after a town in
Germany
where he owns a castle. According to the Financial Times, Astenbeck will take
over management of two oil funds previously operating under Phibro’s aegis.
Hall was the energy trader who created a controversy while
still working for Citi because of his $100 million bonus. The bonus was deemed
politically unacceptable while the bank was receiving a taxpayer bailout and
led to Citi selling Phibro to Oxy Pete.
-----------------------
Darrell Delamaide writes for OilPrice.com and focuses on Fossil
Fuels, Alternative Energy, Metals, Crude Oil Price and Geopolitics. To find out
more visit their website at: http://www.oilprice.com
