Written on: January 2, 2024

Energy Price Report

Tuesday, January 2, 2024

Energy futures are rising on the first session of the new year with gains of between 1.6% in heating oil and 2.1% in gasoline.  The gains came following a weekend attack on a Maersk vessel in the Red Sea, despite weakness in equities and appreciation in the US dollar.  Market traders are looking ahead to the final December Composite PMI from S&P Global and to November construction spending figures for further direction.

Houthi Militants Attack

Reuters reports that the Maersk container ship Hangzhou was attacked by Houthi militants yesterday. Three Houthi ships attempting to board the Bessel were shot down by US helicopters. Maersk halted ship traffic along the Red Sea for 48 hours following the attack and is to decide today whether or not to resume voyages on that route. In other news this morning, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is targeting 2.6mb/d of oil and condensate production by 2026, which would be a 1.0mb/d rise from 2023 levels. The NUPRC says it aims to direct development to areas less prone to vandalism and theft.

Overseas Markets

The Shanghai Composite lost 0.43% and the Hang Seng dropped 1.52% lower. The Tokyo stock exchange was closed for a holiday. In European news, the final S&P Global Manufacturing PMI for France, Germany, and the Eurozone saw surprise upward revisions from the flash estimates, to 42.1, 43.3, and 44.4, respectively. The final CIPS/S&P Global UK Manufacturing PMI, however, saw a surprise downward revision to 46.2. As of this writing, the FTSE 100 in the UK had lost 0.4%, the German DAX had dropped 0.5%, and the French CAC 40 was down by 0.7%.

US Financial Markets

In the US, futures for the Dow, S&P 500, and Nasdaq were seeing respective losses of 0.6%, 0.7%, and 1.0%. Also unsupportive for crude, the US dollar index was rallying to gains of 0.7%.

Energy Futures on Friday

The energy complex settled mixed and little changed on Friday, the final trading session of 2023.  Brent crude closed down 11 cents at $77.04 per barrel, WTI crude shed 12 cents to settle at $71.65 a barrel, gasoline futures added 1.74 cents, settling at $2.1026 per gallon, heating oil settled 32 points weaker at $2.5531 per gallon and natural gas lost 4.3 cents, settling at $2.514 per MMBTU.

Short Term Weather Outlook

As of this morning, the latest 1-5 and 6-10 day ECMWF outlooks call for above-normal temperatures in the Northeast and the Midwest.