Crude oil prices increase after rise in demand, Chinese credit action
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Pablo Gorondi, The Associated Press
Published Tuesday, January 21, 2014 12:15PM EST
Last Updated Tuesday, January 21, 2014 12:16PM EST
The price of oil rose Tuesday after China's central bank injected credit into the financial system to offset concerns about slower economic growth, and experts raised their forecast for global crude demand.
U.S. crude for February delivery rose 18 cents at $94.55 in midday trading on the New York Mercantile Exchange. The February contract expires later Tuesday and most trading has moved to the March contract, which was up 21 cents at $94.80.
Meanwhile, natural gas futures rose more than 1 per cent as snow and frigid air descended on the eastern part of the U.S.
The Chinese central bank announced late in the day it would inject additional money into the financial system, reducing fears of a credit squeeze. That helped to offset lingering concerns after Monday's report of slowing economic growth in China.
Meanwhile, the International Energy Agency raised its demand forecast for 2014 by 90,000 barrels a day and now sees global appetite for crude reaching 92.5 million barrels a day.
Though it remains fragile, demand from Western industrialized nations is set to rise for the first time since 2010, the Paris-based IEA said, also noting that domestic crude production in the United States in 2013 was 990,000 barrels a day higher than a year earlier.
This increase was "one of the largest annual gains on record for any country" and helped offset the impact of supply declines at other sources, like Libya and Iran, the IEA said.
"Global oil demand growth appears to have gradually gained momentum in the last 18 months, driven by economic recovery in the developed world," the IEA said in its monthly report on the oil market.
Natural gas added 7 cents, or 1.6 per cent, to $4.39 per 1,000 cubic feet. The National Weather Service said a winter storm could bring 10 to 14 inches of snow to Philadelphia and southern New England and up to a foot in New York City, to be followed by bitter cold. An arctic air mass will plunge the eastern half of the United States into a deep freeze, with wind chills as low as 40 degrees below zero, the weather service said.
That all means greater demand for natural gas to keep homes and businesses warm.
Brent crude, used to set prices for international varieties of crude, was up 80 cents at $107.15 on the ICE exchange in London.