As Peter Martin highlighted yesterday, like that of many other assets the crude price was hovering ahead of the FOMC’s decision to trim quantitative easing by a further $10 billion. But unlike many other assets, crude has managed to remain relatively stable and continue creeping higher. As much as the changes to the stimulus package may have scared off speculative traders, the underlying demand has remained constant.
The severe bad weather that continues to blight the US’s south coast has been the main driving force behind the nation’s increased demand. And when you consider that we are only likely to see further inclement conditions, this should act as a solid support for the light crude spot price.
We could be in for a strange week, as China is celebrating its new year with a bank holiday stretching until Thursday 6 February.