Crude Oil Futures Rise on Signs of Robust Demand
Despite record rise in Omicron, crude oil futures surged on signs of resilient demand, which helped ease concerns over the coronavirus, Australia’s ANZ Bank said in a Monday note.
Vehicle usage in key markets such as Europe and the US remained relatively unchanged in late December from earlier in the month, even with a surge in coronavirus cases, the bank noted.
In Asia, road traffic also has not been reduced by omicron as diesel sales in India approached pre-pandemic levels in December, ANZ Bank said.
Meanwhile, supply struggles to grow amid unrest and protests in Kazakhstan and similar issues crimping production in Libya, according to ANZ Bank.
The Organization of the Petroleum Exporting Countries is not expected to raise output as members and OPEC allies struggle to achieve their targets, the bank said.
Russia failed to boost output in December and Nigeria is experiencing disruptions at loading facilities. In Canada and the US, a deep freeze has disrupted oil flows.
European gas markets are on a roller coaster ride as the last week of December saw prices fall amid a sharp rise in US LNG shipments into Europe, ANZ Bank said.
Dutch gas futures dropped over 50% from record highs to end the year just under 70 euros per megawatt-hour. However, reduced Russian gas pushed futures back above 85 euros/MWh last week, the bank said.
Current pipeline bookings from Europe remain limited, which could lead to an increased reliance on LNG to boost inventories, ANZ Bank noted. However, lower coal supply from Indonesia could mean that consumers in nearby countries may have to rely more on LNG for heating, boosting sentiment.
As a result, North Asian LNG futures also started the year strongly, compounded by snowfalls in Tokyo that put a strain on Japan’s power grid, according to ANZ Bank.
Supply issues still persist as Royal Dutch Shell plc Prelude LNG facility is expected to remain shut until late February. # Crude Oil Futures Rise on Signs of Robust Demand
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