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Oil slips below US$98 after climbing to 2014 high
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The price of oil slipped below US$98 a barrel on Friday, backing off the 2014 peak it hit in the previous session on signs of stronger recoveries in the US and Japan.
By early afternoon in Europe, benchmark US crude for March delivery was down 43 US cents to US$97.80 in electronic trading on the New York Mercantile Exchange. On Thursday, the Nymex contract gained 87 US cents to settle at US$98.23, the highest close of the year.
Japan reported that factory output rose in December and the consumer price index rose 0.4 percent in 2013, the first increase in five years, further evidence the world's third-largest economy is gaining strength.
News the US economy grew at a 3.2 percent annualized rate in the last quarter thanks to stronger consumer spending has reaffirmed expectations that 2014 will be the best year since the recession ended 4 ½ years ago.
A stronger dollar also weighed on oil prices, making commodities like crude priced in dollars more expensive for traders using other currencies. The euro was down to US$1.3531 on Friday from 1.3552 late Thursday in New York.
Brent crude, used to set prices for international varieties of crude, was down 70 US cents to US$107.25 a barrel on the ICE Futures exchange in London.
The spread between the Nymex and Brent contracts has dropped below US$10 for the first time since early November.
"For as long as the cold snap continues in the US, the trend toward a falling price gap is likely to continue," said analysts at Commerzbank in Frankfurt in a note to clients.
Extremely cold weather in the US has pushed up demand for heating oil this winter, tightening supplies of distillate fuels, including heating oil, to about a fifth below five-year averages. Heating oil futures have gained 10 US cents since Jan. 14.
Forecasts for milder temperatures, however, have pushed natural gas prices sharply lower after they rose earlier this week to levels last seen four years back.
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