An oil pump works in the desert oil fields of Sakhir, Bahrain, Aug. 22, 2012. THE CANADIAN PRESS/AP, Hasan Jamali
January 29, 2014 - 12:31 PM
NEW YORK, N.Y. - The price of oil was flat Wednesday as a big drop in heating oil supplies was offset by a decision by the U.S. Federal Reserve to further reduce its stimulus program.
Benchmark West Texas Intermediate crude for March delivery slipped five cents to close at US$97.36 a barrel on the New York Mercantile Exchange.
Supplies of distillate fuels, including heating oil, declined sharply last week as the U.S. Northeast shivered through a cold spell.
The Energy Department said distillate supplies dropped by 4.6 million barrels, twice what analysts expected. And with cold weather expected to dominate forecasts for the next few weeks, refiners will be demanding more crude to produce heating oil.
The supply report helped push oil slightly higher in the afternoon. But that gain disappeared when the Fed, as expected, said it will cut its monthly bond purchases by an additional $10 billion to $65 billion because of a strengthening U.S. economy.
Oil prices have been underpinned by the Fed's stimulus because it has kept the dollar from strengthening, making oil more affordable for traders using other currencies. The low interest rates created by the bond buying have also attracted investors to commodities like crude oil in search of higher profits.
The rough winter weather in much of the country, including ice storms in the South, gave another boost to natural gas. Futures rose 52 cents, or 10 per cent, to US$5.56 per 1,000 cubic feet.
Brent crude, used to set prices for international varieties of crude, rose 44 cents to US$107.85 on the ICE Futures exchange in London.
In other energy futures trading in New York, wholesale gasoline gained three cents to US$2.66 a U.S. gallon (3.79 litres) and heating oil advanced six cents to US$3.18 a gallon.
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News from © The Associated Press, 2014