Brent crude has remained firm this week, closing on Wednesday a touch higher than Monday’s opening at $116.88. NY and Brent sold off a dollar or so on Monday, in reaction to two months of steady increases and news that Iran was ready to resume nuclear talks – this time including the US. West Texas Intermediate continues to be jerked around by the glut at Cushing, Okla. and the continuing troubles getting the Seaway pipeline up to speed. US production keeps increasing, demand is weak in the US but stronger elsewhere, keeping the spread between WTI and Brent wider than had been expected; at one point on Wednesday Brent was trading at a $20.11 premium, the highest since late December.
The weekly stocks reports showed US crude inventories increasing by 2.6 million barrels, gasoline inventories up by 1.7 million, and distillates which are much in demand overseas down by 1 million. Gasoline deliveries were up 4.7 percent from last year, but much of this increase may be destined for export. Venezuelan refineries are operating way below capacity so Caracas has been making up the difference with gasoline imported from the US.
The price of gasoline in the US, which has risen 25 cents a gallon in the last month, is starting to cause concern. Prices are now at the highest on record for this time of year. While national inventories of gasoline are in good shape, local shortages and refinery outages are pushing prices towards $4 a gallon in California and the New York region.
Natural gas futures have rebounded in the last six trading sessions on forecasts of colder weather and possibly heavy snows in the northeast next week.
A lot of attention is being focused on Washington again. President Obama’s State of the Union address may contain significant new initiatives on carbon emissions controls. Alaska Senator Murkowski has released the Republican “blueprint” for future energy policy. As could be expected, the plan which is mostly more domestic drilling and reduced environmental regulation was criticized by environmentalists and praised by fossil fuel industry spokesmen.
The various problems in the Middle East continue. Iran is willing to start talks on its nuclear program again, but few are optimistic. Suicide bombers continue to blow up government security forces in Iraq and the insurgents in Syria continue to make slow but steady gains. On Wednesday, some rebel forces were reported as getting close to the center of Damascus.
The assassination of the opposition leader in Tunisia resulted in such widespread street protests that the Islamist government dissolved and called new elections.