Oil futures end lower, retreat from a 2-month high

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Oil futures fell lower on Thursday, with a significant increase in US gasoline reserves last week, fueled by concerns over the impact of the Omicron coronavirus pandemic on fuel demand, even as domestic crude supplies hit their lowest level since 2018. is less.

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“Despite the continued weakness in the US dollar, prices have declined, indicating that gains in oil futures over the past month have once again far outstripped physical market reality,” said Troy Vincent, senior market analyst at DTN. ”

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“Expectations of Omicron burning through the population have led many to overlook the impact the current global wave of the virus will have on demand,” he told Businesshala. Wednesday’s Energy Information Administration report “emphasized how hard it is hitting gasoline demand despite the lack of a new US lockdown.”

The EIA reported a higher-than-expected increase in gasoline supply of 8 million barrels and an increase in distillate inventory by 2.5 million barrels.

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West Texas Intermediate Crude for February Delivery CL00,
-1.15%

clg22,
-1.15%
On the New York Mercantile Exchange, it fell 52 cents, or 0.6%, to $82.12 a barrel. March Brent Crude BRN00,
-0.54%

BRNH22,
-0.54%,
The global benchmark fell 20 cents, or 0.2%, to $84.47 a barrel on ICE Futures Europe. Both WTI and Brent ended Wednesday at their highest level since November 9.

Among petroleum products traded on Nymex, February Gasoline RBG22,
-0.72%
fell 0.3% to $2.384 per gallon, while February heating oil HOG22,
+0.12%
increased approximately 0.6% to $2.609 per gallon.

Tensions between Russia and Ukraine are not entirely priced in commodities

Crude oil rose on Wednesday after the EIA reported a more than expected fall in US crude supplies by 4.6 million barrels for the week ended January 7. Excluding supplies in the Strategic Petroleum Reserve, supplies stood at 413.3 million barrels, the lowest. From 2018.

“Although crude inventories were expected to decline, rising gasoline stockpiles helped further” [SPR] The release by the Biden administration has helped push prices down, said Lewis Dixon, senior market analyst at Rystad Energy. “It remains to be seen whether this equilibrium will hold or whether more bullish sentiment will return in the coming weeks as the economy rebounds.”

“However, downside risk remains as demand for refined products continues to decline, keeping prices in check,” she said in a note.

WTI is up over 9% since the start of the new year, while Brent is up more than 8% over the same stretch.

There are currently a record number of patients in US hospitals with COVID-19, but scientists are seeing signs that a wave of infections driven by the highly contagious Omicron variant may be peaking.

Dixon said Brent’s move towards $85 a barrel reflects optimism on Europe’s economic outlook and prospects for oil consumption, fueled by some countries in Europe lifting sanctions to slow the spread of Omicron.

Meanwhile, natural gas futures NG00,
-6.59%

NGH22,
-6.59%
British thermal units per million declined by 12.1% to $4.27. Prices dropped most of the 14% climb they saw on Wednesday, when analysts cited cold weather forecast for the Northeast and Midwest by the end of January for the rise.

The EIA said on Thursday that domestic supplies of natural gas declined by 179 billion cubic feet for the week ended January 7. That compares with an average decline of 177 billion cubic feet estimated by analysts surveyed by S&P Global Platts, which estimated five years. Average supply declined for the period of 155 billion cubic feet.

However, the total stock now stands at 3.016 trillion cubic feet — 72 billion cubic feet above the five-year average, the government said.

The 179 bcf draw for supply, said DTN’s Vincent, was the biggest weekly drop “since the depths of Uri’s winter last February, which caused widespread failure of Texas’ oil, gas and electricity infrastructure amid freezing temperatures.” cause.”

“The big drop in storage last week reflects not only cooler temperatures driving heating demand, but also the natural gas production freeze-off, which has limited production in places like Texas, on a smaller scale than last year,” he said. said. But despite such a huge drop from storage, US stocks are well above the five-year average.

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