New York oil futures have traded between $102-103 this week settling at $102.59 on Wednesday after the weekly stocks report showed little change in crude inventories, but a million barrel decline in the stocks held at Cushing, Okla. Most traders say that the opening of the southern leg of the Keystone pipeline will move enough oil from Cushing to the Gulf to bring WTI close to London oil prices. Stockpiles at Cushing have now declined by 7 million barrels in the last month and the Brent premium has now shrunk to below $7 a barrel. The report also showed US crude production falling by 89,000 b/d last week as extremely cold weather continued to hamper shale oil production.
Natural gas futures have been unusually volatile this week as market sentiment swung between the reappearance of the polar vortex and anticipation that winter is coming to an end. After climbing to $6.50 per million BTUs on Monday prices fell precipitously to close Wednesday at $4.76. Weather forecasters are calling for another two weeks of cold during the early part of March with temperatures returning to normal after that. The extreme cold in the last two months has left gas inventories at their lowest level in ten years and are raising concerns that the industry will not be able replenish its stocks in time for next winter.  This also raises questions about the viability of the drive to increase US natural gas exports and convert more electricity production to gas.
Washington issued emergency orders to test the oil that is being shipped by rail as it becomes apparent that some of the “crude” being shipped from the North Dakota shales is highly volatile as we saw when two recent derailments exploded into fireballs. A barge crash spilled enough oil to close a section of the Mississippi raising further concerns about all the oil that is being shipped around on the surface these days. California is looking for a big increase in the amount of oil coming into the state by rail. Current plans call for some 500,000 b/d to be shipped into the state by rail by the end of 2015, making up for shrinking Alaskan production and replacing more expensive foreign oil.
Overseas, most of the attention has focused on Venezuela this week, where the protests continue across the country. Thus far oil production does not seem to have been affected as the demonstrations are taking place in the center of cities.  Where these protests are going is impossible to say, but the Maduro government clearly is not capable of dealing with the situation.
In the Middle East, the Egyptian government resigned, clearing the way for Field Marshal Sisi to run for President. There is no stability is sight here. The Israelis bombed a Hezbollah arms transfer point in Syria, once again underlining the limits to Israel’s patience with Hezbollah using its participation in Syria to build up its arms stockpile. There is no word on any change in the Libyan situation where exports are close to zero.