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Energy futures contracts for crude oil, refined products and natural gas fell in the new year 2023, at a time when dealers reconsidered short-term concerns in terms of cold weather, supply shortages and fire selling contracts.
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.
These fears proved exaggerated, sending prices down. The results of a Reuters survey indicated that European gas stocks rose to more than the usual seasonal levels, and Saudi Aramco reduced this week; Prices of oil shipments to Asia The production of member states of the Organization of the Petroleum Exporting Countries (OPEC) increased surprisingly last December.
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 percent in the first week of this month, the largest recorded stumble at the beginning of any year, according to Eikon Refinitiv data. The decline of 12 percent in oil derivatives futures contracts was the largest decline to start the year since 1991. Refining oil derivatives consumption usually rises due to the effect of winter demand.
WTI futures, Brent crude and US gasoline suffered their biggest weekly decline at the beginning of the year since 2016, with WTI down 7.4 percent, Brent down 7.3 percent and US gasoline down 7.3 percent.
“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. (Reuters)
