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Crude oil futures fell this week following back-to-back weekly gains, after tough Federal Reserve meeting minutes and cautious comments from several Fed officials helped dampen hopes of interest rate cuts ahead. could boost energy demand.
Federal Reserve Governor Chris Waller, for example, said There was “no rush” to cut rates after inflation and economic data came in stronger than expected since the start of this year.
The United States reported another build in domestic crude stocks this week along with sluggish refinery runs, while production remained near a record 13.3 million barrels/day.
“Concerns that the Federal Reserve will keep interest rates high for longer overshadowed slowly rising geopolitical risks, mainly in the Middle East,” said StoneX's Arlan Suderman, adding that geopolitical risks are important for oil prices. crude oil, “but currently they are not restricting supplies in the world, all we do is increase the risks.”
But some analysts believe demand has remained largely healthy despite the impact of high interest rates; JP Morgan said its demand indicators show oil demand increased by 1.7 million bbl/day month-over-month through Feb. 21, compared with an increase of 1.6 million bbl/day in the week earlier, likely helped by increased travel demand in China and Europe.
Nymex (CL1:COM) crude oil for delivery in April, settled next month -2.5% to $76.49 this week after falling 2.7% on Friday, and front-month April Brent crude (CO1:COM) closed -2.2% in the week to 81.62 $/bbl, falling 2.4% on Friday.
ETF: (NYSEARCA:USE), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI)
Meanwhile, U.S. natural gas futures gave up most of their midweek gains thanks to Chesapeake Energy's plan to reduce drilling and production in 2024 in response to low prices.
While the plan raised expectations of further production cuts, temperature forecasts in early March pointed to a lack of demand driven by climate at the end of the heating season.
March natural gas on the first month Nymex (NG1:COM) fell for the fourth consecutive week. -0.3% to $1.603/MMBtu, including Friday's 7.4% drop; The first month contract has plummeted 40.9% in the last four weeks.
ETF: (UNG), (BOIL), (COLD), (FCG), (UNL)
In Europe, natural gas prices continued to fall with no end in sightas settlement price of reference TTE gas -0.7% to ~€23/MWh, its lowest level since May 2021, with demand remaining weak due to mild weather and a weakening economy, and storage levels even higher than inventories already above average for the year past.
Commerzbank analysts forecast the benchmark TTE will be 35/MWh by the end of 2024, expecting prices to rise throughout the year as the European economy gradually recovers.
The oil and gas sector, represented by the Energy Select Sector SPDR ETF (NYSERCA:XLE), closed +0.5% for the week.
Top 5 Energy & Natural Resources Gainers Over the Last 5 Days: Western Midstream Partners (WES) +17.5%Korea Electric Power (KEP) +15.4%Braskem (BAK) +15.2%Midstream Partner Summit (SMLP) +15.2%Mach Natural Resources (MNR) +13.3%.
Top 10 Declines in Energy and Natural Resources in the Last 5 Days: Fluence Energy (FLNC) -29%Bloom energy (BE) -28.3%Metamaterials (MMAT) -27.6%Power plug (PLUG) -25.1%Sigma Lithium (SGML) -20.9%Stem (STEM) -20.7%Atlas Lithium (ATLX) -16.6%Uranium Energy (UEC) -15.6%Ameresco (AMRC) -15.5%.
Source: Barchart.com
