Old Man Winter will drive demand for gas and fuel oil

Energy Market Updates

Crude oil prices ended higher yesterday, after a volatile session as US inventories fell 6.4 million barrels – more than twice the previous week – in another positive sign for demand.

U.S. crude oil, gasoline and distillate inventory levels are expected to fall again by about 3 million more than expected last week. This would be another significant drop due to increased demand, according to estimated figures released yesterday by the American Petroleum Institute (API).

(Source: Investing.com)

Crude oil prices stabilized near 6-week highs following the OPEC+ group meeting, which maintained a limited production increase of 400,000 bpd (unsurprisingly). It is therefore a question of maintaining an increase in production for the seventh consecutive month.

It also shows that the organization was confident and believed in the resilience of global oil demand despite recent restrictions put in place by several governments spooked by Omicron, even though these travel restrictions could likely delay the recovery of air demand.

RBOB Gasoline (RBG22) Futures (February contract, daily chart)

WTI Crude Oil (CLG22) Futures (February contract, daily chart)

In natural gas, the Henry Hub (US benchmark) is slowly climbing as temperatures drop in many regions, while the European benchmark, the Dutch Title Transfer Facility (TTF), rose 3.5%, European gas prices remaining extremely volatile due to declining exports. from Russia (notably via the Yamal pipeline) but also via Ukraine.

The bullish momentum is also linked to weather forecasts, such as colder temperatures and frost in the European continent in the coming days and weeks, which can obviously have a stimulating effect on gas demand.

Henry Hub Natural Gas (NGG22) Futures (February contract, daily chart)

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Thank you.

Sebastien Bischeri
Oil and Gas Trading Strategist

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