Crude Oil Prices Rebound Amid Bullish Inventory Reports, but Expectations of Further Gains Remain Uncertain

Strategic Insights -

The New York Mercantile Exchange (Nymex) saw a mixed trading session on Thursday, as crude oil futures prices ended an eight-day streak of consecutive gains. On the other hand, January gasoline and heating oil futures surged higher after the American Petroleum Institute (API) released bullish inventory reports on Wednesday evening. The near-month West Texas Intermediate (WTI) crude contract initially rose to $17.96/bbl before slipping back 7cts. in late trading, with the February contract settling at $17.72/bbl.

Key Takeaways:

  • The API reported a 1.5 million bbl draw on inventories last week, contradicting market expectations of a build-up, which led to a significant increase in January gasoline prices, rising 0.93cts. to 54.99cts./gallon.
  • Near-month gasoline showed the biggest gains, with January gasoline rising as high as 55.4cts. and February and April contracts seeing declines of 0.22cts. and 0.18cts. respectively.
  • Heating oil also saw significant gains due to a reported inventory drop of 1.7 million bbl, with January heating oil rising 0.55cts. to 50.66cts./gallon and February heating oil rising 0.3cts. to 50.76cts./gallon.
  • February natural gas futures saw minimal gains, rising just 0.1cts. to $1.686/MMBtu.
  • The lack of trading activity due to the Christmas holidays contributed to the perceived fleeting nature of the latest gains in the crude oil market.
  • The expiration of the January contract on Friday led to a sharp backwardation in Nymex gasoline, with the February contract only rising 0.22cts. to 53.47cts./gallon and April dropping 0.18cts. to 53.27cts./gallon.

Statistics:

  • Crude oil futures prices on the Nymex ended an eight-day streak of consecutive gains on Thursday.
  • The near-month WTI crude contract initially rose to $17.96/bbl before slipping back 7cts. in late trading.
  • January gasoline rose 0.93cts. to 54.99cts./gallon.
  • Heating oil benefitted from a reported inventory drop of 1.7 million bbl, with January heating oil rising 0.55cts. to 50.66cts./gallon.
  • February natural gas futures rose 0.1cts. to $1.686/MMBtu.
  • The API reported a 1.5 million bbl draw on inventories last week.

Sources:

  • American Petroleum Institute (API) - The API released bullish inventory reports on Wednesday evening.
  • New York Mercantile Exchange (Nymex) - Nymex saw a mixed trading session on Thursday, with crude oil futures prices ending an eight-day streak of consecutive gains.