Mayra P. Saefond and William Watts, MarketWatch
SAN FRANCISCO/NEW YORK
EnergiesNet.com 03 12 2024
This feature is powered by text-to-speech technology. Want to see it on more articles?
Give your feedback below or email audiofeedback@marketwatch.com.
Crude futures ended lower on Tuesday, pressured by hotter-than-expected U.S. inflation data that reduced the chances for a Federal Reserve rate cut in June and raised uncertainty about the economic outlook.
Traders also looked to the latest monthly update from the Organization of the Petroleum Exporting Countries, or OPEC, which revealed no changes to the group’s demand forecasts for this year and next.
Natural-gas futures, meanwhile, fell sharply after the Energy Information Administration reduced its 2024 price outlook on expectations for ample supplies.
Price moves
- West Texas Intermediate crude CL00, 0.37% for April delivery CL.1, 0.37% CLJ24, 0.37% declined by 37 cents, or 0.5%, to settle at $77.56 a barrel on the New York Mercantile Exchange, after edging down by 0.1% on Monday.
- May Brent crude BRN00, 0.38% BRNK24, 0.38%, the global benchmark, fell 29 cents, or nearly 0.4%, to $81.92 a barrel on ICE Futures Europe.
- April gasoline RBJ24, 0.47% tacked on 0.2% to $2.59 a gallon.
- April heating oil HOJ24, 0.58% shed 1.3% to $2.62 a gallon.
- Natural gas for April delivery NGJ24, -0.70% settled at $1.71 per million British thermal units, down 2.6%, after also losing 2.6% Monday.
Market drivers
The initial market reaction to the consumer-price index release was a “hawkish one which saw oil prices decline to session lows,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.
“Hawkish central-bank policy is bad for the oil market, because high interest rates over time act as a steady headwind on global growth and ultimately, that weighs on consumer-demand expectations,” he said.
The U.S. government on Tuesday reported a February rise of 0.4% in the consumer-price index.
That matched the average 0.4% advance forecast by economists polled by the Wall Street Journal, but it was also the largest increase since last September.
MarketWatch Live: CPI report for February
The 12-month core rate slipped to 3.8% from 3.9%. The core CPI is seen as a better predictor of future price trends.
With the CPI print “not inspiring expectations of rapid interest-rate cuts, there’s not a reason to be extremely bullish at this time” in oil, said Troy Vincent, senior market analyst at DTN.
“At the same time, there’s little reason to be extremely bearish,” he said. “All of this helps maintain the range-bound trade.”
Separately, in a monthly report Tuesday, OPEC left its forecasts for growth in oil demand in 2024 and 2025 unchanged. It said it expects demand to grow by 2.2 million barrels a day this year and by 1.8 million barrels a day in 2025.
In general, the demand picture from OPEC seems “largely dialed in for market participants in the short run,” said Rohan Reddy, director of research at Global X, in emailed commentary.
Also Tuesday, the EIA lowered this year’s forecast for U.S. natural-gas prices. It sees an average 2024 price of $2.27 per million British thermal units, down 14.4% from the February forecast.
U.S. natural-gas inventories will be 30% higher than average at the end of the winter season after relatively low winter demand, the EIA said. Low prices for the commodity will also slightly decrease natural-gas production in 2024 compared with record production last year, it said.
The government agency also raised its 2024 forecasts for WTI oil by 5.8% to $82.15 a barrel and for Brent oil by 5.6% to $87 a barrel.
The EIA will release its weekly report on U.S. petroleum supplies early Wednesday. On average, analysts polled by S&P Global Commodity Insights forecast a climb of 2.8 million barrels in crude inventories for the week that ended March 8. They also forecast inventory declines of 1.8 million barrels for gasoline and 1.4 million barrels for distillates.
marketwatch.com 03 12 2024
