U.S. crude oil futures turned positive Thursday as fading omicron concerns and signs of strong uptake of crude assets helped to support year-end buying. Natural-gas futures, however, were under pressure after supply data.
“We’ve got oil prices showing some real strength into the end of the year and part of that is easing omicron fear and part of that is falling U.S. inventories,” said Matt Smith, analyst at commodity focused data and analytics firm Kplr, in a phone interview.
Markets had been soft to start the session as S&P Global Platts, citing refining sources, said that China’s Ministry of Commerce has issued 107.4 million metric tons in crude import quotas, falling 9.4% from the same batch in 2021.
However, dwindling concerns about omicron, given evidence that it is less severe than other variants, has bolstered the outlook for demand, Smith said. The analyst said that positive momentum in assets perceived as risky also was sweeping up oil futures along with stocks on Wall Street.
Upbeat economic reports also provided support for energy bulls, as the U.S. Labor Department data on Thursday showed that 198,000 applied for unemployment benefits during the week ended Dec. 25, leaving new jobless claims around a 52-year low amid the spread of omicron.
Separately, the Chicago Business Barometer, also known as the Chicago PMI, rose to 63.1 in December up from 61.8 last month, with the report viewed as an early gauge of the Institute for Supply Management’s more closely followed report on manufacturing activity next Tuesday.
Against that backdrop, West Texas Intermediate crude for February delivery
was trading 24 cents, or 0.4%, higher to reach $76.83 a barrel on the New York Mercantile Exchange, after the U.S. benchmark rose 0.8% on Wednesday. The contract had posted its longest string of gains since Feb. 10, according to Dow Jones Market Data when the market rose for eight sessions in a row.
February Brent crude
added 20 cents, or 0.3%, at $79.41 a barrel on ICE Futures Europe, after rising 0.4% to the highest price since Nov. 25 for the global benchmark.
Both contracts had pared early, modest losses to turn higher.
U.S. Energy Information Administration data on Wednesday showed crude oil inventories fell by 3.6 million barrels in the week to Dec. 24. Gasoline and distillate inventories also declined, indicating demand remained strong despite record U.S. COVID-19 cases.
Global oil prices have rebounded by between 50% and 60% in 2021 as fuel demand recovered to near pre-pandemic levels and output management by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) for most of the year erased a supply glut.
OPEC+ will meet on Jan. 4 to decide whether to continue increasing output in February and the early speculation is that the organization will stand pat on its plan to raise overall monthly production by 400,000 per day starting in January.
In other energy assets natural-gas futures were under pressure, down nearly 4% after EIA data.
The EIA reported that domestic supplies of natural gas fell by 136 billion cubic feet for the week ended Dec. 24. That is more than the 127 bcf average decline forecast by analysts polled by S&P Global Platts. The weekly drawdown also is greater than the five-year average draw of 121 bcf, S&P Global said. Total stocks now stand at 3.226 trillion cubic feet, down 256 billion cubic feet from a year ago but 19 billion cubic feet above the five-year average, the government said.
February natural gas futures
the most-active contract, were trading 16 cents, or 4.3%, lower at $3.686 per million British thermal units.
Meanwhile, January heating oil HOF22 traded 1 cent, or 0.5%, higher, at $2.38 per gallon. The January contract expires at the end of the week.
January gasoline futures RBF22 picked up a penny, or 0.5%, to reach $2.284 per gallon. Gasoline’s January contract also expires at the conclusion of trading on Friday.