Crude Petroleum and Refined Product Prices Rise on New York Mercantile Exchange

Strategic Insights -

Crude petroleum and refined petroleum product prices on the New York Mercantile Exchange saw significant increases on December 28, 1994, as new regulations took effect, reducing supplies compared to the previous year. Analysts attributed the price hike to technical fund purchases, which have been driving the market due to the absence of traditional players on vacation. The West Texas Intermediate (WTI) February futures contract settled at $17.79/bbl, with March crude rising to $17.77/bbl and April crude to $17.79/bbl.

Key Takeaways:

  • The West Texas Intermediate (WTI) February futures contract increased by 15 cents to settle at $17.79/bbl.
  • March crude rose 17 cents to $17.77/bbl, while April crude also increased 17 cents to $17.79/bbl.
  • New regulations, effective December 28, 1994, reduced crude oil supplies compared to the previous year, contributing to price hikes.
  • Crude oil imports are expected to be significantly impacted by the new regulations, with estimated additional costs of 10-11 cents/bbl.
  • Tom Curtis of Pegasus Econometric Group stated that overall oil supplies are down 20 million bbl from a year ago, with demand increasing.
  • The trans-Atlantic crude arbitrage narrowed to $1.37, while Brent crude on the London's International Petroleum Exchange rose 50 cents to $16.42/bbl.
  • January heating oil increased 0.86 cents to 50.11 cents/gallon, driven by forecasts of a cold front in the US northeast and Midwest.
  • February heating oil rose 0.74 cents to 50.46 cents/gallon, in contango with the January contract.
  • January gasoline continued to rise, climbing 0.62 cents to 54.06 cents/gallon, despite inventories being high.

Statistics:

  • The West Texas Intermediate (WTI) February futures contract increased by 15 cents to $17.79/bbl.
  • March crude rose 17 cents to $17.77/bbl.
  • April crude increased 17 cents to $17.79/bbl.
  • The additional cost of insurance for crude and products is estimated at about 10-11 cents/bbl.
  • Overall oil supplies are down 20 million bbl from a year ago, when increased demand is factored in.
  • Natural gas options on Nymex traded in record volumes, with 12,049 options contracts exchanged hands on Tuesday.
  • Total natural gas options traded in 1994 reached 487,201 after Tuesday's close, setting an annual volume record.
  • The previous record for natural gas options trading in one day was 7,288 on December 1, 1994.

Sources:

  • New York Mercantile Exchange (Nymex)
  • Pegasus Econometric Group
  • American Petroleum Institute (API)
  • International Petroleum Exchange (IPE)
  • London's International Petroleum Exchange
  • Wall Street Journal