Reference no: EM13933438

The near $100 oil price a barrel has enormously affected the U.S economy and has resulted from improvement of oil infrastructures. There has been a 9 percent or more oil contracts rise since January. This has resulted from opening of a new pipeline connecting American's major oil storage hub with the major gulf coast refinery. Increase in oil production in North America does not mean that oil prices will go down. Oil prices consumptions has increased despite the rise in oil prices and this means that oil companies are making more profits. The cold winter has raised distillates consumption which is a category of fuel used as a home heating fuel. U.S oil future oil use on Nymex will increase and will outdo Brent. Bret is a benchmark for Europe crude oil used by investors as a gauge for global oil prices. Currently, Nymex oil is trading at $9 below Brent, the gap has narrowed from $15 a barrel. This gap is expected to narrow further and then disappear in the near future within the next few months.

Oil is not in plenty as it was earlier on despite the increase in its demand. United States oil inventories hit 22 month low in mid January and are still down 3.7 % from the previous year. Oil supplies will increase by 2.5 million barrels while the supplies are expected to drop and this will result to a self balancing effect of the trade. Increase in oil prices has resulted to better oil infrastructures such as refineries and oil transportation systems. It is also expected that the problem of getting oil out of Cushing will be solved as a result of increase in oil prices.