Oil futures edge down after hitting 2-month high
Oil futures edged lower Thursday, but continued to trade near two-month highs as investors remain upbeat about demand as the spread of the omicron variant shows signs of slowing and supplies remain tight.
West Texas Intermediate crude for February delivery
fell 43 cents, or 0.5%, to $82.21 a barrel on the New York Mercantile Exchange. March Brent crude
the global benchmark, was down 28 cents, or 0.3%, at $84.39 a barrel on ICE Futures Europe.
WTI and Brent both finished Wednesday at their highest since Nov. 9. WTI remains up more than 9% since the start of the new year, while Brent is up 8.6% over the same stretch.
“The main factors driving prices up are external factors such as the generally positive market sentiment as omicron concerns abate and the expectation of continued dynamic economic development, which is also reflected in the improved assessment of oil demand,” said Carsten Fritsch, analyst at Commerzbank, in a note.
A record number of patients are currently in U.S. hospitals with COVID-19, but scientists see signs that the infection wave driven by the highly contagious omicron variant may be nearing a peak.
Crude was boosted on Wednesday after the Energy Information Administration reported a larger-than-expected 4.6 million-barrel fall in U.S crude supplies for the week ended Jan. 7. At the same time, the agency reported a larger-than-expected rise in gasoline supplies of 8 million barrels a 2.5 million barrel increase in distillate inventories.
“Although the fall in crude inventory was expected, rising gasoline stockpiles helped by further [Strategic Petroleum Reserve] releases by the Biden administration have helped level off prices,” said Louise Dickson, senior market analyst at Rystad Energy. “It remains to be seen whether this balance will last or if more bullish sentiment will return as the economy rebounds in the coming weeks.”
Dickson said Brent’s march toward $85 a barrel reflected optimism over Europe’s economic outlook and prospects for oil consumption, boosted by the by the lifting of omicron-inspired movement restrictions by countries on the continent.
“However, downside risk remains as the demand for refined products continues to slump, keeping prices in check,” she said, in a note.
were down 2.4% at $4.222 per million British thermal units after a 14% leap on Wednesday, with analysts citing forecasts for colder weather for the Northeast and Midwest through late January.
Natural-gas storage data will be in focus Thursday. On average, analysts expect the EIA on Thursday to report a natural-gas supply withdrawal of 177 billion cubic feet for the week ended Jan. 7, according to a survey conducted by S&P Global Platts. That compares with a five-year average decline of 155 billion cubic feet.