Oil futures edged higher Monday, attempting to bounce after last week’s rout sparked by uncertainty over the global demand outlook.
Price action
- West Texas Intermediate crude for March delivery CL.1, +1.27% CL00, +1.27% CLH23, +1.27% rose 22 cents, or 0.3%, to $73.61 a barrel on the New York Mercantile Exchange. The U.S. benchmark fell 7.9% last week to end Friday at its lowest since Jan. 4.
- April Brent crude BRN00, +1.54% BRNJ23, +1.54%, the global benchmark, gained 48 cents, or 0.6%, to trade at $80.42 a barrel on ICE Futures Europe. It fell 7.5% last week to end Friday at its lowest since Jan. 4.
- March gasoline RBH23, +1.18% was fractionally higher at $2.321 a gallon, while March heating oil HOH23, +0.58% was up 0.3% at $2.783 a gallon.
- March natural gas NGH23, +1.87% fell 0.9% to $2.388 per million British thermal units, after dropping more than 15% last week and finishing Friday at its lowest since Dec. 28, 2020.
Market drivers
Oil slumped last week as traders remained uncertain about the global demand outlook, including the scope for increased consumption from China following the Lunar New Year. Another large jump in U.S. stockpiles of crude also weighed on prices, analysts said.
The European Union on Sunday imposed a ban on Russian refined energy products, following on an earlier ban on seaborne Russian crude.
“The ban will have the largest impact on Russian diesel and naphtha flows to the EU. However, EU buyers have had time to prepare for the ban. In the period leading to the cutoff, there were increased flows of middle distillates to the EU and this has helped to push gas oil inventories in the ARA (Amsterdan-Rotterdam-Antwerp) region back up towards the 5-year average,” said Warren Patterson and Ewa Manthey, commodity strategists at ING, in a Monday note.
U.S. Treasury Secretary Janet Yellen on Friday said industrialized countries in the Group of Seven were imposing a price cap on refined Russian oil products such as diesel and kerosene, as part of a coalition that includes Australia and a tentative agreement from the European Union. A similar cap was previously placed on Russian oil exports, with the aim of reducing the financial resources available to Russian President Vladimir Putin to wage the nearly yearlong war in Ukraine.
Natural gas failed last week to benefit from a short-lived cold snap that brought extremely low temperatures to the U.S. Northeast.
“After a couple nights of record temps in New England, heating demand disappeared as fast as it appeared,” wrote analysts at the Schork Report on Monday.
Nearly three-fifths of the way through heating season, the market has delivered 1.061 trillion cubic feet (tcf) of gas out of underground storage in the Lower 48 U.S. states — less than half of last summer’s 2.262 tcf injection, they said. If nothing happens to change the trajectory, storage is on track to end winter around 1.742 tcf, well above the Energy Information Administration’s forecast of 1.493 tcf and last year’s ending balance of 1.382 tcf, the analysts wrote.
Add Comment