Crude oil prices in Europe and the U.S. were holding near 2014 highs
Monday despite the storms battering equity markets and emerging
economies.
Brent, the European benchmark, slipped but remained in a
narrow range below $108 a barrel, while U.S. WTI contract is hovering
around $97 a barrel, after a week of strong gains.
Volumes are relatively thin, however, with many investors
likely to stick to the sidelines ahead of the Federal Reserve's meeting
on Tuesday and Wednesday, when clarity will be sought on the scale and
timing of plans to taper the central bank's price-supportive bond-buying
program.
Brent crude for March delivery fell 0.3% to $107.57 a barrel
on ICE Futures Europe after failing to hold above $108 a barrel in each
of the previous three sessions. U.S. crude-oil futures were up 0.3% at
$96.90 a barrel on the New York Mercantile Exchange after gaining more
than 3% last week.
David Hufton, an analyst at brokerage PVM, said that growing
macroeconomic and geopolitical issues could combine to bring back risk
trading as the dominant price driver for oil.
"Pending that the front end of the market is showing no sign
of surplus with both Brent and WTI in backwardation," Mr. Hufton said in
a note to clients.
This situation, where the price of crude for immediate
delivery is more expensive than that for delivery at a later date,
usually signals that supply and demand are tightly balanced. The oil
market was widely expected to be adequately supplied this year, with
shut-in crude expected to resume from Libya and a potential return to
the market of Iranian barrels.
Coupled with that, the brutal selloff in emerging markets last
week is affecting the very countries that have been driving demand for
oil. The Turkish currency fell Monday to a record low against the
dollar. The price of crude in Turkish lira has more than doubled since
2008.
The price gap between Brent and WTI, known as the spread,
narrowed Monday. Last week it fell below $10 for only the second time
since mid-November.
Recently the ICE's gas oil contract for February delivery was
up $3.00 at $924.75 a metric ton, while Nymex gasoline for February
delivery was down 115 points at 2.6517 cents a gallon.