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Petroleum

Crude, Products, and Natural Gas Futures Decline Across the Board

Strategic Insights

— 1 min read

As thermostats rose across most of the United States, crude, products, and natural gas futures on the New York Mercantile Exchange (Nymex) dropped across the board. The National Weather Service's five-day forecast predicted normal to well-above-normal temperatures for most of the country, leading to a decline in prices for heating oil and natural gas futures. Tom Curtis of Pegasus Econometric Group suggests that the near-term collapse of heating oil prices creates a buying opportunity, advising investors to buy February or March contracts and sell August or September contracts.

Key Takeaways:

  • February heating oil plummeted 0.95 to 47.38/gallon, near daily lows, and March heating oil fell 0.81 to 47.81/gallon.
  • February natural gas hit life-of-contract lows, settling at $1.439/MMBtu, down 1.5 from Monday.
  • Crude and gasoline futures were sluggish on Tuesday in advance of the American Petroleum Institute's inventory report, due for release after the market closed.
  • February crude slipped 3 to $17.37/bbl on technical weakness, trading in a slim 23 range.
  • The reversal of near-term heating oil prices is predicted by Tom Curtis of Pegasus Econometric Group, citing "when, not if" as the timing for the correction.
  • February or March heating oil contracts are advised by Curtis to be bought, while August or September contracts should be sold.
  • The trans-Atlantic arbitrage window has been closed slightly tighter as a result of the decline in February Brent, which fell 9 to $16.19/bbl.

Statistics:

  • February heating oil price drop: 0.95 to 47.38/gallon.
  • March heating oil price drop: 0.81 to 47.81/gallon.
  • February natural gas price drop: 1.5 to $1.439/MMBtu.
  • February crude price drop: 3 to $17.37/bbl.
  • February Brent price drop: 9 to $16.19/bbl.

Sources:

  • WASHINGTON -- Crude, products and natural gas futures on the New York Mercantile Exchange (Nymex)
  • The National Weather Service's five-day forecast
  • Tom Curtis of New York-based Pegasus Econometric Group
  • American Petroleum Institute's inventory report
  • London's International Petroleum Exchange (IPE)

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