Sun | Jun 13, 2021

Oil closes below US$84

Published:Friday | June 15, 2012 | 12:00 AM

Hopes that the United States Federal Reserve will do more to support the US economy drove oil to its biggest gain in two months on Thursday. Meanwhile, natural gas rose the most since January 2010 on signs of increased use of the fuel by utilities.

Speculation that the Fed will announce new steps to boost the economy grew after government reports showed that hiring is still weak while inflation remains in check. Any boost to the economy should increase demand for oil, gasolene and diesel fuel.

Benchmark crude rose US$1.29 to finish at US$83.91 per barrel Thursday in New York, the largest increase since April 11.

Brent crude, which is used to price international varieties, gained 45 cents to US$97.17 per barrel in London.

In Vienna, ministers of the Organisation of the Petroleum Exporting Countries (OPEC) decided to keep a production target of 30 million barrels a day.

The decision had been expected. Although some members of OPEC want to reverse a recent sharp decline in oil, others worry that higher oil prices could hurt global economic growth.

Oil has fallen 24 per cent from its peak in late February.

Natural gas futures soared 31 cents to finish at US$2.495 per 1,000 cubic feet, the sharpest gain since January 6, 2010. The Energy Department reported that natural gas in storage grew by 67 billion cubic feet to 2.944 trillion cubic feet for the week ended June 8. That increase was four billion cubic feet less than analysts expected.

Rusty Braziel, president of RBN Energy, a consulting company based in Houston, says the report relieved fears that the nation's natural gas storage facilities would reach capacity and prices would plummet further.

He sees signs that natural gas drillers have curtailed the dramatic growth in production that sent prices near a 10-year low earlier this year.

At the same time, utilities are burning more natural gas in place of coal, helping to relieve the gas glut a bit. Total inventories are still 29 percent above the five-year average of 2.278 trillion cubic feet.

Heating oil rose 1.69 cents to end at US$2.6278 per gallon and gasolene futures gained 2.1 cents to US$2.6764 per gallon.

- AP