By Myra P. Saefong and William Watts
Oil futures rose Wednesday, with investors and analysts fixated on prospects for a pickup in crude demand from China after the country shed COVID curbs that were seen curtailing consumption by one of the world’s largest energy importers.
Natural-gas futures, meanwhile, extended a January plunge.
Price action
Market drivers
Oil prices stumbled to begin the year but have bounced back, with WTI back in positive territory for the month, on optimism over the outlook for crude demand from China.
The bounce has “coincided with a significant fundamental shift in the global macroeconomic landscape that should sow the seeds for further oil price appreciation from here as bullish reopening expectations continue to build on the premise that full-on China demand is nowhere near reflected in current market prices, especially if international travel continues to open up,” said Stephen Innes, managing partner at SPI Asset Management, in a note.
The OPEC+ Joint Ministerial Monitoring Committee (JMMC), which reviews the oil market, plans to meet on Feb. 1, and it is not expected to change the group’s production quota, the Kansas City energy team at StoneX wrote in Thursday’s newsletter.
“This is widely being considered a bullish expectation considering China’s reopening adding more crude demand,” they said.
The next full meeting of members of the policy-setting Organization of the Petroleum Exporting Countries and their allies is scheduled for June.
Natural gas, meanwhile, has tumbled, and may settle at the lowest since April 2021, amid unseasonably warm weather in the U.S. and much of the Northern Hemisphere. That’s helped Europe to refill natural-gas supplies, averting a winter heating crunch that had been widely feared as a result of Russia’s invasion of Ukraine.
The U.S. Energy Information Administration reported on Thursday that domestic natural-gas supplies fell by 91 billion cubic feet for the week ended Jan. 20. That compared with an average analyst forecast for a decline of 84 billion cubic feet, according to a survey conducted by S&P Global Commodity Insights.
However, total working gas stocks in storage stand at 2.729 trillion cubic feet, up 107 billion cubic feet from a year ago and 128 billion cubic feet above the five-year average, the government said. The average five-year withdrawal is 185 bcf, according to S&P Global Commodity Insights.
-Myra P. Saefong
(END) Dow Jones Newswires
01-26-23 1055ET
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