Energy futures contracts fell at the beginning of 2023, while dealers reconsidered concerns in 2022 in terms of weather, supply shortages, and selling contracts at low prices.
According to data, energy futures contracts for crude oil, refined products and natural gas declined in the new year.
Prices rose last year on fears that Europe would freeze over a Russian fuel shortage, while OPEC+ cuts to production targets and lower stockpiles of US derivatives raised the prospect of curbs on fuel exports.
Those fears proved exaggerated, sending prices lower. Archyde.com survey results indicated that European gas stocks rose to more than usual seasonal levels. Saudi Aramco this week cut oil shipping rates to Asia and production from members of the Organization of the Petroleum Exporting Countries (OPEC) increased. ) surprisingly last month.
Warmer-than-normal temperatures in the United States and Europe have also reduced the need for gas and oil for heating purposes.
US natural gas fell 18% in the first week of this month, the largest recorded stumble at the beginning of any year, according to Eikon Refinitiv data.
The 12% drop in oil-refining derivatives futures contracts was the biggest drop to start the year since 1991.
The consumption of oil refining products usually increases due to the effect of winter demand.
WTI, Brent and US Gasoline futures suffered their biggest weekly declines at the start of 2016, with WTI down 7.4%, Brent down 7.3% and US Gasoline down 7.3%.
“Some of our biggest fears will not materialize in 2022,” said John Kilduff, a partner at Again Capital in New York.
He added that while OPEC’s spare capacity is limited, traders see additional supply coming from, among others, Brazil and Canada.
“Natural gas prices are betting that the 2023 inventory numbers will be lower in the coming weeks reflecting warmer temperatures across the US, with a good chance of turning into a storage overhang,” said Bob Yawger, director of energy futures at Mizuho in New York. on an annual basis.”
It should be noted that the Chinese vacation begins at the end of January and extends until February 15, and in some factories it extends to early March, and during this period the demand for oil decreases; This led to a significant decline in prices.
Oil price today
There was no change in oil prices at the end of last week’s trading, amid a decline in the US dollar and US job reports, but the two benchmarks ended the first week of the year in decline due to global recession fears.
Brent crude futures fell 12 cents, or 0.2%, to settle at $78.57 a barrel, and US West Texas Intermediate crude rose ten cents, or 0.1%, to $73.77 a barrel.
On a weekly basis, both Brent and West Texas Intermediate fell by more than eight percent, which is their largest weekly decline in the beginning of the year since 2016.
Both benchmarks rose about 13% over the previous three weeks.
“The oil market may regain some calm after the big changes earlier this week, but the upside potential is still limited, at least in the near term,” said Stephen Brennock, an analyst at BVM. “The economic outlook is murky.”
China, the world’s largest importer of crude oil, took a sudden turn in its strict “zero Covid” policy in early December after rare protests there, which led to a surge in infections across the country.