Whiplash: Energy Markets Begin 2023 With Biggest Weekly Dive In Years
Energy Futures For Crude Oil refined product and natural gas plummeted in the new year As traders review short-term concerns about cold weather and fears of supply shortages and scrapped contracts.
Prices rose last year on concerns that Europe would stall due to Russian fuel losses as OPEC+ cut production targets. and because the US refined oil stocks The very low fuel export trend is likely to decline.
Those fears proved exaggerated, driving prices down. Gas stocks in Europe are above seasonal norms. Saudi Aramco cut the price of oil shipped to Asia this week. And OPEC members’ output rose unexpectedly last month, a Reuters poll found.
Warmer temperatures in the US and Europe have led to a decrease in demand for heating gas and oil.
US natural gas fell about 18% in the first week of January. That’s a record high at the start of the year. According to Refinitiv Eikon, the 12% drop in Distillate Futures is the biggest annual drop since 1991. Distillate consumption tends to increase as winter demand rises.
US West Texas Intermediate oil futures, Brent and US gasoline futures. They were each the biggest weekly drop since 2016, with WTI down 7.4%, Brent 7.3% and US gasoline 7.3%.
“Our biggest fears for 2022 have never materialized,” said John Kilduff, partner at New York-based Again Capital LLC. Although OPEC’s reserve capacity is limited. But traders see additional supply coming from Guyana, Brazil and Canada, he said.
The specter of the recession raises new questions about demand. US Employment and Manufacturing Data disappointing as well as COVID-19 patients rising in china Fear of a global recessionwhich will reduce fuel demand
last week, china lift Refined product export quotas signal weak domestic demand ahead.
Expectations of a price recovery pushed prices in the US futures market and Brent crude traded lower in the second-month contract. This is a market structure known as Contango. This incentivizes traders to buy and store fuel ,
Further afield, U.S. crude futures next month traded as low as 56 cents less than their six-month low, the widest discount since Dec. 12.
in natural gas U.S. futures fell further on Friday, down 5% to $3.52 per million British thermal units during the session. which is the lowest since July 2021
“January 2023 was the warmest start in more than 15 years,” analysts at energy consultancy EBW Analytics told clients in a note.
It is too early to say whether the price will recover quickly. The oil curve could strengthen as demand recovers and as markets run through OPEC reserves. Goldman Sachs analysts said
The bank expects Brent to average $90 per barrel in 2023, down from $110 the previous week. British normals in the second to third quarters.