DTN Thursday Energy Comments

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

February WTI crude oil futures closed up 43 cents at $76.99 while March closed up 43 cents at $76.61 and February Brent crude oil closed up $1.56 at $76.85 per barrel, closing higher for the seventh straight session at a five-week high. According to Dow Jones, the increase marks the longest winning streak since Feb. 10 when the market rose for eight straight sessions. The end-of-year rally is being driven by data showing strong demand along with falling inventories and production levels by the U.S. and others still below pre-pandemic levels. "Omicron remains a concern for investors as 2022 approaches, but much less so than when it was first detected in late November, given its seemingly mild symptoms compared to other variants, and a global society apprehensive about returning to lockdown status," said Dow Jones.

The U.S. has reported record-high COVID-19 cases this week, with the seven-week moving average touching 277,241 cases Dec. 28, surpassing the previous high of 250,435 cases Jan. 11, data from the U.S. Centers for Disease Control and Prevention showed. Hospitalizations and deaths, however, remain far below their prior peaks, CDC data and media reports showed. "All indications point to a lesser severity of omicron versus delta. The data are encouraging, but still in many respects preliminary," the White House's Chief Medical Adviser Anthony Fauci said at a briefing Dec. 29.

February RBOB closed up $2.48 cents at $2.2914 and March RBOB was up 2.33 cents at $2.2921, still feeling good about the bullish EIA report showing gasoline stocks down 1.5 million barrels (bbl) versus trade estimates of a 200,000 bbl increase from the previous week. Demand for gasoline surged 738,000 barrels per day (bpd), or 19.6%, to 9.724 million bpd, the highest demand rate since the final week of July.

Natural gas prices dropped 7.5% to finish at $3.561/mmBtu. It's the third straight session of declines for the market and a reflection of mild weather that has almost completely erased fears of winter shortages, noted Dow Jones. A weekly storage report Thursday from the EIA was actually bullish as it showed inventories fell by 136B cubic feet, which topped the average decline of 121-bcf and also topped forecasts in a WSJ survey for a 114-bcf decline. "But investors are apparently in no mood to start buying into the market just yet, especially as warm weather continues in high-population regions such as Texas and much of the Southeast, keeping demand low," reported Dow Jones.

Regional ethanol cash prices and RINs were not available Thursday, but state prices today showed the market is still bearish. The average daily ethanol price for 24 states reporting was $2.8812 per gallon, down 6.89 cents from Wednesday. The biggest drops were in Iowa, down 10.21 cents, Minnesota was down 11.61 cents, North Dakota was down 10.08 cents, Pennsylvania was down 17 cents and California was down 15 cents per gallon.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow her on Twitter @MaryCKenn

Liubov Georges