Oil futures ended with a loss on Tuesday as investors continued to monitor the outlook for demand amid uncertainty over the global economic outlook.
Ample U.S. supplies, meanwhile, contributed to a session decline of nearly 9% for natural-gas futures.
- West Texas Intermediate crude for March delivery CL.1,
-0.38%CLH23, -0.38%edged down by 18 cents, or 0.2%, to end at $76.16 a barrel on the New York Mercantile Exchange on the contract’s expiration day. The new front month April WTI CL00, -0.56%CLJ23, -0.56%crude contract, which is most actively traded, fell 19 cents, or nearly 0.3%, settle at $76.36 a barrel. WTI futures didn’t settle Monday due to the Presidents Day holiday in the U.S.
- April Brent crude BRN00,
-0.31%BRNJ23, -0.31%, the global benchmark, lost $1.02, or 1.2%, at $83.05 a barrel on ICE Futures Europe after rising 1.3% on Monday.
- Back on Nymex, March gasoline RBH23,
+0.43%rose 0.3% to $2.4156 a gallon, while March heating oil HOH23, +2.72%gained 2.9% to $2.7919 a gallon.
- March natural gas NGH23,
-9.01%fell 8.9% to settle at $2.073 per million British thermal units, for a fourth straight session decline. Prices marked another finish at their lowest since September 2020.
Crude remains lower for the month, with pressure tied to worries that aggressive tightening by major central banks, including the Federal Reserve, could cause a significant economic slowdown later in the year.
The rise in both the U.S. dollar and short-duration Treasury yields stoked concerns about the Fed Reserve crushing the economy with “too-aggressive policy decisions this year,” analysts at Sevens Report Research wrote in Tuesday’s newsletter.
“From a demand standpoint, recessions are clearly not a positive situation for consumption of refined products,” which is why U.S. oil prices fell 4% last week, they said.
On the supply side, Russia previously announced a plan to cut production by 500,000 barrels a day in March. But oil has struggled to gain ground in part due to Russian crude exports that have remained robust, analysts have said.
Citing Bloomberg data, analysts at Commerzbank said Russian crude oil exports surged by 26% to 3.6 million barrels per day last week, with shipments from all Russian export terminals on the Baltic Sea and Black Sea, as well as in the Far East, reaching multiweek highs.
“Even if the marked upswing week-on-week was attributable to the previous week’s low level, the four-week average also shows an upward trend. 3.2 million barrels per day went to China, India, Turkey and other unknown destinations — this is the highest figure since the data series began at the start of 2022,” they wrote.
“China’s increased oil demand is thus being met to a large extent by higher supply from Russia. This may explain why the oil price has not been able so far to profit from the demand growth in China,” they said.
Natural-gas futures, meanwhile, are back to where they started in the third quarter of 2020, “after a spate of mild weather caused Henry Hub prices to slide below $2.30,” analysts at BofA Securities wrote in a research note dated Monday.
Nine months ago, ahead of a fire that shut the Freeport LNG shipping facility, natural gas was trading above $9 per million Btus, U.S. inventories were 300 billion cubic feet under seasonal five-year average levels and “there was concern about inventories running dangerously low,” said the BofA Securities analysts.
“Since then, mild weather and strong production growth caused the balances to flip, with inventories recently rising to more than 180 [billion cubic feet] above seasonal norms, a dynamic that has also played out in Europe,” they said.