Oil futures rise Thursday as year-end buying persists
U.S. crude oil futures turned positive on Thursday as concerns easing omicron and signs of strong gross asset absorption helped support year-end buying. However, natural gas futures were under pressure after the supply data.
“We have oil prices showing real strength towards the end of the year and part of that is alleviating the omicron fear and part of that is the drop in US stocks,” said Matt Smith, analyst at commodity-focused data and analytics company Kplr, in a phone interview.
Markets were weak to start the session as S&P Global Platts, citing refining sources, said China’s Commerce Ministry issued 107.4 million metric tonnes of crude import quotas, down 9 , 4% compared to the same lot in 2021.
However, lessening concerns about omicron, given that it is less severe than other variants, has bolstered the demand outlook, Smith said. The analyst said the positive dynamics in assets perceived to be risky were also sweeping oil futures as well as stocks on Wall Street.
Upbeat economic reports also supported energy bulls, as US Department of Labor data showed on Thursday that 198,000 claimed unemployment benefits during the week ended December 25, leaving new jobless claims around a 52-year low amid the spread of omicron.
Separately, the Chicago Business Barometer, also known as the Chicago PMI, rose to 63.1 in December from 61.8 last month, with the report seen as a first measure of the Institute for Supply Management on manufacturing activity next Tuesday.
In this context, West Texas Intermediate crude for delivery in February CLG22, + 0.43%
CL00, + 0.43%
was trading 24 cents, or 0.4%, higher to hit $ 76.83 a barrel on the New York Mercantile Exchange, after the US benchmark rose 0.8% on Wednesday. The contract had recorded its longest streak of gains since February 10, according to Dow Jones Market Data, when the market rose for eight consecutive sessions.
February Brent gross BRNG22, -0.11%
added 20 cents, or 0.3%, to $ 79.41 a barrel on ICE Futures Europe, after rising 0.4% to the highest price since Nov. 25 for the global benchmark.
Both contracts had initially reduced modest losses to increase.
Data from the US Energy Information Administration on Wednesday showed crude oil inventories fell 3.6 million barrels in the week to December 24. Gasoline and distillate inventories have also declined, indicating that demand has remained strong despite record cases of COVID-19 in the United States.
Global oil prices rebounded 50-60% in 2021 as fuel demand returned to near pre-pandemic levels and production management by the Organization of the Petroleum Exporting Countries and its allies (OPEC +) for most of the year wiped out a glut of supply. .
OPEC + will meet on January 4 to decide whether to continue increasing production in February and early speculation is that the organization will maintain its plan to increase overall monthly production by 400,000 per day from January.
In other energy assets, natural gas futures were under pressure, down nearly 4% after EIA data.
The EIA reported that national natural gas supplies fell 136 billion cubic feet for the week ended December 24. That’s more than the average decline of 127 billion cubic feet predicted by analysts polled by S&P Global Platts. The weekly draft is also higher than the five-year average draft of 121 billion cubic feet, S&P Global said. Total inventories now stand at 3,226 billion cubic feet, down 256 billion cubic feet from a year ago, but 19 billion cubic feet above the five-year average, said the government.
Natural gas in February NGG22, -4.60%,
the most active contract, traded at 16 cents, or 4.3%, down to $ 3.686 per million British thermal units.
Meanwhile, January’s HOF22 heating oil traded 1 cent, or 0.5%, higher, at $ 2.38 per gallon. The January contract expires at the end of the week.
January RBF22 gasoline futures gained a dime, or 0.5%, to hit $ 2.284 per gallon. January’s gasoline contract also expires when trading closes on Friday.