Oil Prices Slip Amid OPEC Rumors and Weak Gasoline Demand

Strategic Insights -

Oil prices slid on Thursday, driven by a combination of bearish sentiment, increased Iraqi oil exports, and weak gasoline demand. Although rumors of an emergency OPEC meeting initially sparked a rally, the prospect of such a gathering was later dismissed by Venezuelan Energy and Mines Minister Erwin Arrieta. Meanwhile, the U.S. continued to experience a cold snap, which may provide some support for heating oil prices in the short term.

Key Takeaways:

  • Front-month New York Mercantile Exchange (Nymex) light, sweet crude futures dipped 11 cents to settle at $16.34/bbl, just 3 cents above its intraday low.
  • The spread between Nymex crude and London International Petroleum Exchange (IPE) North Sea Brent narrowed to 90 cents/bbl.
  • February gasoline lost 0.66 cents to settle at 50.39 cents/gallon, with weekly gasoline inventory reports invalidating arguments for support in the gasoline market.
  • Gasoline stocks rose by about 6 million bbl last week, according to the American Petroleum Institute and the Energy Information Administration (EIA).
  • Heating oil peaked at 47 cents/gallon before settling at 46.23 cents/gallon, down 0.05 cents.
  • The Nymex Henry Hub gas futures contract for February delivery rose 7.8 cents to settle at $2.094/MMBtu.
  • Spot liquefied petroleum gas (LPG) prices were mixed, with propane prices dipping slightly despite supportive inventory reports.

Statistics:

  • Crude oil prices: $16.34/bbl (February contract, Nymex)
  • North Sea Brent futures: $15.44/bbl (February delivery, IPE)
  • Gasoline prices: 50.39 cents/gallon (February contract, Nymex)
  • Incremental gasoline stocks: 6 million bbl
  • Propane inventories: 40 million bbl (estimated, EIA)
  • Spot liquefied petroleum gas (LPG) prices: mixed compared with the previous week
  • Natural gas futures: $2.094/MMBtu (February contract, Nymex)

Sources:

  • Venezuelan Energy and Mines Minister Erwin Arrieta (no date)
  • American Petroleum Institute (no date)
  • Energy Information Administration (EIA) - report on gasoline stocks (no date, noted as "the week ended Jan. 9")
  • American Gas Association - report on storage (no date)
  • U.S. Energy Information Administration (EIA) - propane inventory estimates (no date, noted as "the week ended Jan. 9")
  • New York Mercantile Exchange (Nymex) - crude and gasoline futures prices (no date)
  • International Petroleum Exchange (IPE) - North Sea Brent futures prices (no date)