Mar WTI crude oil (CLH23) this morning is up +0.93 (+1.16%), and Mar RBOB gasoline (RBH23) is down -1.86 (-0.70%). Â Feb Nymex natural gas (NGG23) is down -0.123 (-3.78%).
Crude oil and gasoline prices are mixed. Â A stronger dollar today is weighing on energy prices along with a selloff in stocks, which reduces confidence in the economic outlook and energy demand. Â However, crude prices recovered from early losses and pushed higher after weekly EIA crude inventories rose less than expected. Â
Feb nat-gas this morning tumbled to a new 19-month nearest-futures low. Â Gas prices fell after updated weather forecasts today shifted slightly warmer in the East and less cold in the Rockies, which will reduce heating demand for nat-gas. Â Also, EBW Analytics Group said in a note to clients today that nat-gas prices are facing "extended downside risks over the next 30-45 days" due to a combination of strong production, constrained export demand because of the Freeport LNG terminal shutdown, growing inventory surpluses, and mild winter temperatures.
U.S. economic concerns are bearish for crude prices as warnings about future earnings from several mega-cap technology companies have sparked concern about a broader slowdown in the economy that would curb energy demand.
Delegates from OPEC+ said the group would maintain its crude production targets at current levels when they meet on Feb 1, as they await clarity on the recovery in consumption in China and the impact of sanctions on Russian crude supplies. Â Goldman Sachs predicts that OPEC+ will only start to reverse its supply cuts, currently about 2 million bpd, in the second half of this year when accelerating demand will tighten the market.
A bullish factor for crude is the removal of China's pandemic travel restrictions that have bolstered expectations for a jump in domestic and international flights in China during the week-long Lunar New Year that began on Saturday.
China boosted its crude import quotas earlier this month, a sign from the world's largest crude importer that it is gearing up to meet higher demand. Â As of last week, China has issued a combined 132 million metric tons (MMT) of quotas for crude imports in 2023, well above the quota for 109 MMT at the same time last year. Â Â Â
In a bullish factor, Vortexa reported Monday that the amount of crude stored on tankers that have been stationary for at least a week fell -1.2% w/w to 86.77 million bbl in the week ended January 20.
Increased OPEC crude output is bearish for oil prices. Â OPEC Dec crude production rose +150,000 bpd to 29.140 million bpd. Â OPEC+ on December 4 decided to keep the group's crude production targets unchanged for January, in line with expectations. Â OPEC+ will meet again on February 1 to discuss its production targets.
Today's weekly EIA inventory report was mixed for energy prices. Â On the bullish side, EIA crude inventories rose +533,000 bbl, a smaller increase than expectations of +1.4 million bbl. Â Conversely, EIA gasoline supplies rose +1.76 million bbl to a 9-month high, a larger build than expectations of +1.50 million bbl. Â Also, EIA distillate stockpiles fell -507,000 bbl, a smaller decline than expectations of -1.6 million bbl. Â Crude supplies at Cushing, the delivery point of WTI futures, jumped +4.27 million bbl to a 1-year high.
Today's EIA report showed that (1) U.S. crude oil inventories as of January 20 were +2.5% above the seasonal 5-year average, (2) gasoline inventories were -7.7% below the seasonal 5-year average, and (3) distillate inventories were -19.6% below the 5-year seasonal average. Â U.S. crude oil production in the week ended January 20 was unchanged w/w at 12.2 million bpd, which is only 0.9 million bpd (-6.9%) below the Feb-2020 record-high of 13.1 million bpd.
Baker Hughes reported last Friday that active U.S. oil rigs in the week ended January 20 fell by -10 rigs to 613 rigs, below the 2-1/2 year high of 627 rigs posted on December 2. Â U.S. active oil rigs have more than tripled from the 17-year low of 172 rigs seen in Aug 2020, signaling an increase in U.S. crude oil production capacity.
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More Natural Gas News from Barchart
- Nat-Gas Prices Retreat on Abundant U.S. Supplies
- Crude Prices Fall as Weak Stocks Prompt Risk Aversion
- Nat-Gas Prices Sharply Higher on Forecasts for Colder U.S. Temps
- Crude Prices Underpinned by Expectations of Stronger Chinese Energy Demand
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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