US crude extends rally on supply, demand expectations
U.S. oil rose on Monday, supported by upbeat economic data that fueled hopes for demand growth and expectations that supplies would continue to drain from the benchmark delivery point for the U.S. oil futures contract. Meanwhile, natural gas prices sunk in choppy trade.
Natural gas futures were volatile, at one point nearing $6.50 per 1,000 cubic feet before dropping. Natural gas finished down 69 cents, or 11 percent, to $5.45. Although cold weather has returned to many areas after a brief warm spell, some forecasts suggest warmer weather by the end of next week. Profit-taking may have also pushed prices lower, traders said.
Brent oil was supported by production outages in Libya and South Sudan that curbed exports and tightened global supply.
Preliminary estimates for weekly data show a decline of more than 1 million barrels at Cushing, Oklahoma, where oil is delivered against the New York Mercantile Exchange oil futures contract, according to traders and brokers who cited data from energy intelligence group Genscape.
The spread between global benchmark Brent and U.S. oil had narrowed to a near 5-month low around $7 per barrel.
Brent crude was up 80 cents above $110 a barrel, after ending higher for a second straight week. U.S. oil rose 62 cents to settle at $102.82, extending its six week climb, its longest winning streak in more than a year.
Both contracts were off their highs reached last week when they were supported, in part, by cold weather in the U.S. which boosted demand for distillates, which include heating oil.
Oil demand tracks global economic growth closely and markets found support on Monday from a bevy of sound global economic indicators. The world's top economies have targeted a goal of generating more than $2 trillion in additional output over five years while creating millions of new jobs.
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—Reuters with AP