In a pair of the more bizarre trading days in recent memory, oil prices soared by nearly $4 a barrel on Monday and Wednesday before and after the Congress passed a “fix” for the fiscal cliff crisis, hopefully avoiding what was widely believed to be a sure-fire formula for a global recession in the coming months. At Wednesday’s close, NY oil was at $93.12 a barrel and Brent was at $112.47. The euphoria engendered by the settlement should fuel trader optimism for at least a couple of weeks; however, the debt ceiling and federal budget deadlines are only months away.
US oil futures dropped 7.1 percent in 2012, the first decline since 2008; however much of that is attributable to the glut in the Midwest. Both US and Chinese manufacturing data are showing signs of expansion giving analysts hope that NY oil will soon be trading above $95 a barrel.
One of Shell’s two Arctic drilling rigs is beached on an island after it broke free from its tow ship during a fierce winter storm. So far there are no signs of any spillage from the 150,000 gallons of fuel on board and efforts are underway to recover the platform. Critics of Arctic drilling are already questioning the long-term feasibility of such operations.
US natural gas futures tumbled on Monday and Wednesday to close at $3.23 per million BTUs. A combination of new forecasts for warmer weather in key parts of the US during January and large inventories are responsible for the decline. Some analysts expected natural gas to be trading in the vicinity of $3.00 before the end of the week. The weekly inventory report is due on Friday.
The oil industry had a good year in 2012 with OPEC taking in more that $1 trillion in revenues while US gasoline prices averaged $3.60 during the year, the highest annual average on record. Average US prices during the year ranged from $3.94 on April 6th as the Iranian sanctions were being imposed to a low of $3.22 on December 20th.
The Senate Bill which passed Congress on Tuesday night contains at least 12 measures to extend tax credits for alternative energy, including wind, biofuels, electric vehicles and building insulation.
The battle for Syria roars on with the government mounting offensives in a Damascus suburb to drive back the rebels. The insurgents are concentrating on overrunning airfields in order to deprive government forces of its airpower. The anti-Shiite demonstrations in Iraq continue with the Prime Minister warning that he will not tolerate these demonstrations to continue indefinitely.
Official reporting maintains that President Chavez is in “delicate” condition, but “recovering.” Foreign newspapers sources have him in a coma, close to death and unlikely to ever return to the Presidency.