Oil gives up early gains to snap three-day winning streak
William Watts, MarketWatch
EnergiesNet.com 12 22 2022
Oil futures ended lower Thursday, snapping a three-day winning streak as traders tracked a big winter storm barreling across the U.S. and monitored developments around China’s relaxation of its stringent anti-COVID policies.
A sharp selloff for stocks also appeared to weigh on crude, analysts said.
- West Texas Intermediate crude for February delivery CL00, 1.39% CL.1, 1.39% CLG23, 1.39% fell 80 cents, or 1%, to close at $77.49 a barrel on the New York Mercantile Exchange.
- February Brent crude BRNG23, 1.23%, the global benchmark, dropped $1.22, or 1.5%, to settle at $80.98 a barrel on ICE Futures Europe. March Brent BRN00, 1.15% BRNH23, 1.16%, the most actively traded contract, fell 91 cents, or 1.1%, to $81.67 a barrel.
- Back on Nymex, January gasoline RBF23, 0.60% declined 0.3% to close at $2.2488 a gallon.
- January heating oil HOF23, 1.30% was down 0.3% to $3.1314 a gallon.
- January natural gas NGF23, -0.72% dropped 6.3% to $4.999 per million British thermal units for its lowest close since Oct. 21.
Forecasters predicted heavy snow, ice, flooding and even tornadoes Thursday through Saturday across a large swath of the country from the Plains and the Midwest to the East Coast, to be followed by a surge of cold air. The Christmas weekend could be the coldest in decades.
The cold snap is seen as curtailing travel in the holiday period.
Oil futures initially added to gains seen after the Energy Information Administration on Wednesday reported a 5.9 million barrel drop in U.S. crude inventories in the week ended Dec. 16. The EIA said gasoline stocks rose 2.5 million barrels, while distillate supplies fell by around 200,000 barrels.
Analysts surveyed by S&P Global Commodity Insights had expected crude inventories to show a rise of 600,000 barrels, while gasoline stocks were seen rising 1.6 million barrels and distillate supplies falling 400,000 barrels.
Crude rallied nearly 3% after the data Wednesday, and gains may have been even more pronounced if not for fears that the storm would limit travel, said Charalampos Pissouros, senior investment analyst at XM, in a note.
U.S. stocks fell sharply, while the dollar gained ground after a recent pullback.
“Oil prices appear to follow the big boards today and [are] getting weighed down by a stronger U.S. dollar, with cross-asset markets held hostage by risk aversion probably more closely linked to Fed-induced recession fears,” said Stephen Innes, managing partner at SPI Asset Management, in emailed comments.
Meanwhile, investors continue to assess the implications of China’s relaxation of its COVID curbs.
“After hitting a nearly one-year low on Dec. 9, oil prices entered a recovery mode, printing a higher low this week, perhaps helped by hopes that China would ease its COVID-related restrictions. Nonetheless, a discussion of a full-scale bullish reversal appears premature for now as it may take some time for China’s economic engines to restart and revive crude demand,” Pissouros wrote.
Oil-field services company Baker Hughes Inc. on Thursday said the number of U.S. oil rigs rose by two this week to 622. The tally was up 142 from the same time last year.
The EIA said natural gas in storage fell by 87 billion cubic feet in the week ended Dec. 16. The agency had been expected to report a withdrawal of 94 billion cubic feet, according to a survey of analysts by S&P Global Commodity Insights.
— The Associated Press contributed to this article.
marketwatch.com 12 22 2022