Stock Market

Oil prices on track for back-to-back losses – News Opener

Oil futures were on track Thursday to tally back-to-back declines as China’s zero-COVID policy continued to dull the outlook for energy demand.

Natural-gas futures bucked the downtrend for the energy sector as U.S. government data showed a weekly increase in domestic supplies that generally met with market expectations.

  • West Texas Intermediate crude for December delivery
    CL.1,
    -4.64%

    CLZ22,
    -4.64%

    fell $2.91, or 3.4%, to trade at $82.61 a barrel on the New York Mercantile Exchange. Prices on Wednesday saw the lowest settlement for a front-month contract since Oct. 25, according to Dow Jones Market Data.

  • January Brent crude 
    BRN00,
    -3.08%

    BRNF23,
    -3.08%

    declined by $2.10, or 2.3%, to $90.76 a barrel on ICE Futures Europe, after settling Wednesday at the lowest since Nov. 9.

  • December gasoline 
    RBZ22,
    -2.55%

    lost 1.7% to $2.4662 a gallon, while December heating oil
    HOZ22,
    -3.19%

    traded at $3.5379 a gallon, down 2.1%.

  • December natural gas
    NG00,
    +2.15%

     rose 1.9% at $6.316 per million British thermal units, extending a nearly 2.8% gain from a day earlier.

Market Drivers

“Crude oil continues to drift downward, with demand a bigger area of concern for investors than supply,” Colin Cieszynski, chief market strategist at SIA Wealth Management, told MarketWatch.

The recent bounce in oil prices on hopes that China would reduce COVID restrictions has faded “after rule changes turned out to be less than the street had hoped,” he said.

China’s State Council warned cities to avoid “irresponsible loosening” of COVID-19 measures, according to the South China Morning Post. Separately, on Wednesday, The Wall Street Journal reported a sevenfold surge in COVID inflections in the past two weeks in China, even as the nation’s new policy of loosened measures aimed at reducing the impact of zero-COVID restrictions.

Elsewhere, “the economy in Europe and other parts of the world continues to struggle and North America, while not as bad off as elsewhere, remains bumpy,” said Cieszynski.

In other energy news Thursday, U.S. natural-gas supplies climbed by 64 billion cubic feet for the week ended Nov. 11 to about 3.6 trillion cubic feet, according to data from the Energy Information Administration. That compared with an average analyst forecast for an increase of 62 billion cubic feet, according to a survey conducted by S&P Global Commodity Insights.

Natural-gas futures continued to trade higher following the data.

“As the seasonal peak in natural-gas storage approaches, inventories have moved to a comfortable level, squarely in the middle of the range for the past five years,” Peter McNally, global sector lead for industrials materials and energy at Third Bridge, told MarketWatch.

The 3.6 trillion cubic feet of natural gas in U.S. storage is “healthy, but from here out, weather becomes one of the key factors to watch as a driver of demand,” he said.  

Oil prices, meanwhile, have been volatile in recent days, but risks to global supplies appear to have eased.

News earlier this week of a missile that landed in Polish farmland, killing two people, raised tensions in the region. Poland said Wednesday, however, that there was no indication that the missile was an intentional attack on the NATO country, according to a report from The Associated Press.

A reported drone strike off the coast of Oman, which hit an oil tanker associated with an Israeli billionaire, also contributed to geopolitical tensions.

Oil prices had posted declines on Wednesday, after the EIA said domestic crude inventories fell by 5.4 million barrels for the week ended Nov. 11, but stocks of gasoline and distillates climbed by 2.2 million and 1.1 million barrels, respectively.

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