London crude has traded in a narrow range around $111 a barrel this week. New York futures, however, dropped to a six-month low on Wednesday after the EIA reported the 10th straight increase in US crude stocks and an increase in US crude production to over 8 million b/d. New York oil closed Wednesday at $92.30. The 3 million barrel increase in US crude stocks was five-six times what analysts had been expecting and sent the US crude inventories up to 391 million barrels, supplies at Cushing, Okla., up by 676,000 barrels, to 40.6 million.

The crude glut in the US combined with the sparse production from Libya sent the WTI/Brent spread to a close of $19.01 on Wednesday, just a few months after the market believed the two prices were returning to their traditional relationship. Despite US imports of nearly 8 million barrels of crude per day, some traders are calling for changes to US export policies which would allow the US surplus crude production to be exported. Some analysts are noting that US refiners are having trouble managing their supply/demand/refining balance this year. Some of the problem may be the quality of the crude. Most US Gulf refineries are setup to process heavy sour crudes imported from abroad, while European refineries are designed for lighter crudes such as those from Libya or US shales.

The EIA also reported higher refining, with rates returned to 89.4 percent of capacity, due to the return of refineries from maintenance and strong export demand for US distillates. This export demand and colder weather left the US with a 1.7 million barrel drop in distillate stocks last week and a 1.8 million barrel increase in gasoline inventories.

Colder weather across much of the US sent natural gas prices up to a six week high, closing Wednesday at $3.90 per million BTUs.

Repercussions from the Iranian nuclear agreement still dominate the news. With two-thirds of the American people approving of the agreement, as opposed to US involvement in another Middle Eastern war, the Congress seems to be backing off efforts to scuttle the agreement by strengthening sanctions for the time being. Along with some members of the US Congress, the Saudis and Israelis are still upset over the prospect of better relations between Iran and the US. Tehran has its own trouble with hardliners denouncing the preliminary agreement.

Terrorist bombs are still going off at the usual pace in Iraq, killing and maiming dozens. The Sunnis in Baghdad are closing their mosques in protest against the endless terrorist attacks, mostly by al Qaeda against Shiite worshippers.

In Libya, the usually ineffective army went after a major militia group in Benghazi and after several days of fighting managed to force the militia out of its headquarters and into hiding. No sign of increased oil production as yet and the government said on Wednesday that its oil revenues are down 80 percent and. The country is now out of money and will seek loans to pay its bills. Without enough natural gas, power cuts are looming and the country is sinking into anarchy.

In Egypt the military government in trying out its new law that forbids all street protests. Although aimed at the Islamists, the law applies even to those protesters that brought it to power. The government is already handing out heavy prison sentences, even to women, caught demonstrating.