Myra P. Saefong and Williams Watts, MarketWatch

SAN FRANCISCO/NEW YORK
EnergiesNet.com 11 15 2022

Oil futures closed higher Tuesday, shaking off early losses that pulled prices for global and U.S. benchmark crude to their lowest intraday levels in three weeks, as traders continued to weigh prospects for oil demand.

Signs of a crimp to supplies offered some futures price support. In a report Tuesday, the International Energy Agency warned of tighter global supplies ahead as the European Union’s ban on Russian oil goes into effect in early December.

And the dollar’s fortunes, with the buck in a strengthening trend after a six-week slide, was impacting U.S. commodity markets, including oil and gas.

Stocks SPX, +0.87% were subjected to volatile trade in afternoon action after a report said Russian missiles had hit NATO member Poland, but the impact was limited in the oil and gas space, at least initially.

Price action

• West Texas Intermediate crude for December delivery CL.1, 0.22% CLZ22, 0.22% CL00, 0.22% settled up $1.05, or 1.2%, to $86.92 a barrel on the New York Mercantile Exchange after losing 3.5% on Monday. It touched a low of $84.06.
  
  
• January Brent crude  BRN00, 0.52% BRNF23, 0.52% climbed by 72 cents, or 0.8% at settlement, to $93.86 a barrel on ICE Futures Europe after trading as low as $91.53. Prices for the front-month Brent and WTI contracts both tapped their lowest intraday levels since Oct. 25, FactSet data show.
  
  
• December gasoline  RBZ22, 0.66% lost 0.5% to $2.5161 a gallon.
  
  
• December heating oil HOZ22, 0.56% traded at $3.6351 a gallon, up 2.5%.
  
  
• December natural gas  NGZ22, -0.80% was up 1.7% at $6.034 per million British thermal units.

Market drivers

The IEA on Tuesday said that more than 1 million barrels a day of Russian oil exports will be upended within weeks, with a European ban on Russia crude oil imports and a plan to cap prices for Russian crude-oil sales go into effect.

The Paris-based agency also raised its global oil demand forecast for this year by 170,000 barrels a day to 99.8 million barrels a day and for next year by 130,000 barrels a day to 101.4 million barrels a day.

The IEA report followed the release of the Organization of the Petroleum Exporting Countries’ monthly oil report on Monday. OPEC modestly revised lower its forecast for growth in global oil demand by 100,000 barrels a day to 2.5 million barrels a day, while making small tweaks to its supply forecasts and holding off from making changes to its global economic growth forecasts.

Read The Wall Street Journal: Oil Market Faces ‘Considerable Uncertainties,’ OPEC Warns

OPEC warned that the oil market faces considerable uncertainties, “and while that is a bold statement, the reality is that based on their own data, the oil market is tighter than it has been in over a decade,” said Phil Flynn, senior market analyst at The Price Futures Group, in a daily report.

Markets continue to look for signs of economic optimism, or fresh worry, from major oil consumers.

“For all the optimism over an economic reopening, the penny finally appears to be dropping that even if Chinese officials are talking about it, they remain some way off implementing it,” said Michael Hewson, chief market analyst at CMC Markets UK.

Meanwhile, Troy Vincent, senior market analyst at DTN, was attributing oil’s earlier move lower to “both physical and financial market developments.”

The dollar saw some “buying interest after nearing a major technical support level…as the euro is bumping up against long-term technical resistance,” he told MarketWatch. “The potential that this proves to be the beginning of the dollar continuing its long-term strengthening trend after a six-week correction is a worry for oil markets.”

The ICE U.S. Dollar index DXY, -0.20% was up 0.1% at 106.78 in late Tuesday dealings, but continues to trade more than 10% higher month to date. Strength in the greenback can pressure dollar-denominated commodity prices, including oil.

U.S. petroleum inventory numbers should be in focus moving through midweek, said Robbie Fraser, manager, global research and analytics at Schneider Electric, in a daily note.

While commercial crude stocks have managed to gain ground recently, that growth has often “come at the expense of further declines” in U.S. Strategic Petroleum Reserves, he said.

The Energy Information Administration will release its weekly U.S. petroleum supply report Wednesday morning. On average, analysts expect the report to show supply declines of 400,000 barrels for crude, 800,000 barrels for gasoline, and 500,000 barrels for distillates, according to a survey conducted by S&P Global Commodity Insights.

marketwatch.com 11 15 2922