DTN Oil Update
ULSD at 2-Month High, Natural Gas Jumps on Storm Fern
SECAUCUS, N.J. (DTN) -- ULSD futures hit a two-month high Monday, Jan. 26, and natural gas rallied as well after a massive ice storm raised heating demand from the Southern Plains to Northeastern U.S.
Crude and gasoline futures dipped as oil export terminals in Kazakhstan resumed full operations from an outage.
The U.S. dollar hit a four-month low against a basket of currencies, limiting the downside for oil and other commodities denominated in the greenback.
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Severe arctic conditions are expected to have idled some 250,000 bpd of output after the weekend's Winter Storm Fern, analysts at JPMorgan said in a note.
Even so, regional grid operators like PJM Interconnection were bracing for all-time winter peak loads exceeding 147 gigawatts this week after the storm that impacted over 230 million people.
ULSD is particularly sensitive to such freezing conditions given the dependence on heating oil at this time of year.
Diesel consumption is also expected to spike from heavier reliance on machinery and equipment needed to clear ice and other debris from the storm, which dumped as much as a foot of snow in some areas. Delivery trucks and heating systems were working overtime, emergency responders said.
Regional distillate reserves hit extreme lows last week, staying about 14% under five-year averages. The drop highlights the vulnerability of local energy networks during prolonged winter emergencies.
In Kazakhstan, full capacity returned to export terminals in the Black Sea on Sunday, easing concerns over near-term crude supply.
NYMEX ULSD futures contract for February delivery strengthened by $0.1177 to $2.5462 gallon after a two-month high at $2.5797.
In crude, WTI futures for March delivery settled down $0.44 at $60.63 bbl, while the March ICE Brent futures contract finished down $0.29 at $65.59 bbl.
Front-month RBOB futures fell by $0.0325 to $1.8369 gallon.
Natural gas for February delivery on the CME jumped by $1.269 per MMBtu to $6.544.
The U.S. Dollar Index fell by 0.574 points to 96.83, after a four-month low at 96.62.