On the New York Mercantile Exchange (NYMEX), crude oil prices for NYMEX prompt-month contracts increased by more than 2% for Brent and Western Texas Intermediate (WTI) in the first three weeks of December compared to November.
By the end of the third Thursday of December 2013, the NYMEX Brent prompt-month contract increased to $109 USD/bbl; meanwhile, WTI went up after its third consecutive monthly decline from $3 USD/bbl to $97 USD/bbl. WTI’s discount to Brent slightly widened to $12 USD/bbl, the highest level since March.
In its weekly analysis, the U.S. Energy Information Administration (EIA) reported that U.S. crude oil inventories dropped by 2.9 million barrels in the week ending December 13 – 600,000 barrels lower than the market expectations.1 Also, WTI received further support after the Census Bureau said U.S. housing stats rose to 1.09 million units in November 2013 from 0.89 million in October.2 Additionally, market participants, investors, and traders witnessed more support for WTI after the Federal Reserve meeting regarding reduction of the pace of stimulus package.5 The stimulus package is viewed as a key driver in boosting consumption and the price of commodities, especially crude oil.
Brent received support from a labour strike at Total refineries and political instability in Libya. The labour strikes at the Gonfreville, Feyzin, and La Mede refineries of Total SA–refineries with a capacity to process about 460,000 bpd– supported the Brent prices.3 Additionally, Libyan rebels’ refusal to allow the government to ship oil from three major ports put upward pressure on Brent.4