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Oil Prices 7 Year High; Draw from Natural Gas Supply Largest Since Winter Storm

Summary:
RJS, Focus on Fracking Oil prices rose for a fifth consecutive week and hit a 7 year high in the process, on supply disruptions in the Middle East and on rising tensions between NATO and Russia…after rising 6.3% to .82 per barrel last week on a softening of Fed rhetoric and on a production shortfall by OPEC+, the contract price for US light sweet crude for February delivery opened 50 cents higher on Tuesday after the MLK holiday as rising geopolitical tensions in the Middle East and Europe threatened to disrupt supplies, and subsequently rose to a 7 year high on an upbeat demand forecast from OPEC that minimized the impact of the Omicron surge on global oil consumption, before settling .61 or nearly 2% higher at .43 a barrel, as robust

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RJS, Focus on Fracking

Oil prices rose for a fifth consecutive week and hit a 7 year high in the process, on supply disruptions in the Middle East and on rising tensions between NATO and Russia…after rising 6.3% to $83.82 per barrel last week on a softening of Fed rhetoric and on a production shortfall by OPEC+, the contract price for US light sweet crude for February delivery opened 50 cents higher on Tuesday after the MLK holiday as rising geopolitical tensions in the Middle East and Europe threatened to disrupt supplies, and subsequently rose to a 7 year high on an upbeat demand forecast from OPEC that minimized the impact of the Omicron surge on global oil consumption, before settling $1.61 or nearly 2% higher at $85.43 a barrel, as robust domestic demand and strained supplies kept US markets running hot…oil prices jumped to another 7 year high early Wednesday after the International Energy Agency forecast that global oil demand would surpass pre-pandemic levels this year, supported by a robust recovery in jet fuel consumption, and approached $88 a barrel after a fire on a pipeline from Iraq to Turkey briefly stopped oil flow, before settling $1.53 higher at $86.96 a barrel, its highest settlement since Oct. 9, 2014, as demand for oil continued to prove resilient to omicron….oil prices eased early Thursday, as traders took profits after the weekly report from the American Petroleum Institute showed U.S. crude and gasoline stocks rose last week, but reversed to move higher in late morning trade despite weekly inventory data from the EIA showing U.S. commercial crude and gasoline inventories increased more than expected, as domestic refiners scaled back crude throughputs amid still sluggish demand for gasoline, but then softened near the close on the mixed inventory data and a stronger US dollar to settle 6 cents lower, as trading in February oil expired with the contract priced at $86.90 a barrel…with oil quotes now referencing the lower priced contract for US light sweet crude for March delivery, which had closed Thursday down 25 cents at $85.55 a barrel, oil prices opened nearly $1 lower and tumbled more than $1 more in early trading on Friday as oil traders took profits after Thursday’s inventory reports, but reversed in afternoon trading to settle just 41 cents, or 0.5% lower, at $85.14 a barrel, as analysts said they expected the pressure on prices to be limited, due to supply concerns and rising demand…but even after falling Friday, oil prices still finished 1.6% higher on the week, with the contract price for US light sweet crude for March delivery finishing 2.2% higher, as geopolitical tensions threatened greater supply outages alongside stronger demand figures, despite the omicron variant

With oil prices hitting a 7 year high this week, we’ll put up a long term graph here and take a look.. 

The above is a screenshot of the current interactive oil price chart from barchart.com, which i have set to show front month oil prices monthly over the past 10 years, which means you’re seeing the same range of oil prices that were quoted by the media over that stretch….this interactive chart can also be reset to show prices of front month or individual monthly oil contracts over time periods ranging from 1 day to 30 years, as the menu bar on the top indicates, and also to show oil prices by the minute, hour, day, week or month for each…each bar in the graph above represents the range of oil prices for a single month, with months when prices rose indicated in green, with the opening price at the bottom of the bar and the closing price at the top, and months when prices fell indicated in red, with the opening price at the top of the bar and the closing price at the bottom, while the small sticks above or below each monthly bar represent the extent of the price change above or below the opening and closing price during the month in question….meanwhile, the bars across the bottom show trading volume for the front month oil contract for the months in question, again with up months indicated by green bars and down months indicated in red…you might note on this graph that this week’s 7 year high came as we eclipsed the 7 year high established back in October…October prices of seven years ago, on the other hand, were in a period when oil prices were rapidly collapsing from above $100 a barrel to below $50 a barrel, so it is unlikely that we’ll extend our interim price record beyond seven years anytime soon.. 

Natural gas prices, on the other hand, finished lower for the first time in four weeks, as key temperatures warmed and forecasts moderated as the week progressed…after rising 8.8% to $4.262 per mmBTU last week on an outbreak of polar air in the densely populated northeastern US, the contract price of natural gas for February delivery opened nearly 2% higher on Tuesday on forecasts for colder weather and higher heating demand over the next two weeks than had been forecast before the holiday weekend. but backtracked to settle just 2.1 cents higher at $4.283 per mmBTU, as prices pulled back sharply in the volatile Northeast amid a spell of moderate weather to start the week…prices then tumbled 25.2 cents, or nearly 6% to $4.031 per mmBTU on Wednesday after the latest forecasts pulled back modestly from earlier expectations for a bitter cold pattern over the northern and eastern US, and then fell another 22.9 cents or 5.6% to $3.802 on Thursday, as weather conditions warmed, eclipsing the impact of record export volumes, production threats and the biggest storage drawdown of the season…natural gas recovered most of that drop on Friday, rising 19.7 cents to $3.999 per mmBTU, amid updated forecasts for freezing conditions to extend into next month and amid expectations for stout withdrawals from storage, but still finished 6.2% lower for the week… 

The EIA’s natural gas storage report for the week ending January 14th indicated that the amount of working natural gas held in underground storage in the US fell by 206 billion cubic feet to 2,810 billion cubic feet by the end of the week, the largest gas storage withdrawal since February 19th of last year, which left our gas supplies 226 billion cubic feet, or 7.4% below the 3,036 billion cubic feet that were in storage on January 14th of last year, but still 33 billion cubic feet, or 1.2% above the five-year average of 2,777 billion cubic feet of natural gas that have been in storage as of the 14th of January over the most recent five years….the 206 billion cubic foot withdrawal from US natural gas working storage for the cited week was somewhat more than the average forecast for a 193 billion cubic foot withdrawal from a S&P Global Platts’ survey of analysts, and was well more than the 179 billion cubic feet that were pulled from natural gas storage during the corresponding week of 2021, and also quite a bit more than the average withdrawal of 167 billion cubic feet of natural gas that have typically been pulled out natural gas storage during the same week over the past 5 years…   

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