Cold Weather In The US Keeps Oil Prices Elevated
Despite the Federal Reserve's decision to cut its stimulus spending further, Brent crude oil gained momentum and approached $108. The commodity traded at $107.87 at 7:50 GMT as cold weather across the US increased demand for heating oil.
CNBC reported that data from the Energy Information Administration helped support oil prices as well. The report showed that US distillate stocks fell by 4.6 million barrels for the week that ended on January 24th. Most are expecting to see stocks fall even further as the US braces itself for colder than normal weather of the next few days.
Brent also found support from the ongoing conflict in the Middle East and North Africa. In Libya, several of the nation's largest export terminals remained shut as armed protestors keep them from operating normally. On Wednesday, the tension escalated when the nation's deputy prime minister narrowly avoided gunfire in Tripoli.
However, weak Chinese data and a stronger dollar kept Brent in check. Chinese economic indicators have been repeatedly disappointing, causing many to speculate that the number two oil consuming nation's slow down has stretched into 2014.
In the US, the opposite is true. Improving economic conditions prompted the US Federal Reserve to cut its bond buying program by another $10 billion at Wednesday's policy meeting. Although a stronger US economy should translate into increased oil demand, the decisions added strength to the dollar which in turn put pressure on crude prices. Losses were minimal though, as the decision to taper further was widely expected.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.