NEW YORK, NY -- (Marketwire) -- 01/30/13 -- Oil prices have risen sharply this week, with U.S. crude for March delivery on the New York Mercantile Exchange settling at $97.57 a barrel on Tuesday, the highest level since September. The spike in oil prices comes just ahead of release of fourth quarter financial results from major integrated oil and gas companies, including BP Plc and Royal Dutch Shell. Oil prices are gaining as the outlook for the global economy continues to improve. On Tuesday, a report highlighted the ongoing recovery in the U.S. housing market. The S&P/Case-Shiller of home prices in 20 U.S. cities rose.
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While the economic outlook for U.S., the world's largest oil consumer, continues to improve, China is also showing signs of improvement. China is the world's second largest oil consumer. Recent economic data from the country has been encouraging and suggests that the growth in the world's second largest economy is likely to accelerate as the year progresses. Conversely, the Eurozone is also showing signs of stabilizing as concerns over the region's debt crisis continue to ease.
As the global economy continues to improve, the Organization of Petroleum Exporting Countries (OPEC) is upbeat about oil prices in 2013. The oil cartel expects prices of around $110 a barrel for Brent crude on average in 2013. However, rising tensions in the Middle-East are also pushing oil prices higher. There is a belief that geopolitical tensions could ease in the coming months.
Yesterday, the American Petroleum Institute (API) reported that oil inventories rose 4.16 million barrels last week to 368.2 million. According to API data, crude stocks at Cushing dropped 15,000 barrels, while gasoline stocks climbed 2.4 million barrels and distillate stocks dropped 1.8 million barrels. The Energy Information Administration (EIA) will release its report on weekly inventory on today.
The sharp rise in oil prices pushed the Energy sector sharply higher in trading on Tuesday. The gains come just ahead of the release of quarterly results from major integrated oil and gas companies, including BP Plc and Royal Dutch Shell. While BP will release its quarterly results on February 5, 2013, Royal Dutch Shell will report theirs on January 31, 2013. Recently, Chevron Corp., another major oil and gas company, had said that it expects fourth quarter profit to be notably higher than the third quarter.
On Tuesday, BP also announced that the U.S. District Court for the Eastern District of Louisiana accepted its plea resolving all federal criminal charges against the company related to the Deepwater Horizon accident, oil spill and response. In November last year, BP had reached an agreement with the Department of Justice in connection with the Gulf of Mexico oil spill.
Meanwhile, Royal Dutch Shell this week announced that its subsidiary, Shell US Gas & Power LLC and Southern Liquefaction Company LLC plan to form a limited liability company to develop a natural gas liquefaction plant in two phases.
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