Why was the oil price down today - Dec 28

[dan_s]

From Market Watch: U.S. crude inventories drop by larger-than-expected 6.9 million barrels < Just remember that during the week between Christmas and New Years commodity prices can make big moves on light trading volume.

Oil futures ended lower Thursday as traders put worries over the potential for
shipping disruptions in the Red Sea on the back burner, with the market
failing to get a lift from data showing a drop in U.S. crude inventories last
week.

Price action

West Texas Intermediate crude CL00 for February delivery CL.1 CLG24 fell
$2.34, or 3.2%, to finish at $71.77 a barrel on the New York Mercantile
Exchange.
February Brent crude BRNG24, the global benchmark, declined $1.26, or
1.6%, to settle at $78.39 a barrel on ICE Futures Europe.
March Brent BRN00 BRNG24, the most actively traded contract, dropped
$2.39, or 3%, to $77.15 a barrel.
On Nymex, January gasoline RBF24 dropped 3.2% to finish at $2.085 a
gallon, while January heating oil HOF24 declined 2.6% to $2.556 a
gallon.
February natural gas NGG24 jumped 4.9%, ending at $2.557 per million
British thermal units.

Market drivers

Shipping company Maersk (DK:MAERSK.A) (DK:MAERSK.B) on Wednesday said it had
scheduled several dozen container ships to move through the Suez Canal and Red
Sea in the coming days and weeks. Maersk and other shippers had previously
rerouted ships away from the area after a series of drone and missile attacks
by Iranian-backed Houthi rebels in Yemen following the start of the
Israel-Hamas war.

The U.S. last week announced the formation of a naval alliance to thwart the
attacks, which had raised concerns about potential disruptions to oil
shipments from the Middle East.

"Oil prices fell as global shipping giants prepared to resume navigation
through the Red Sea despite ongoing missile attacks from Houthi rebels,"
Stephen Innes, managing partner at SPI Asset Management, said in a note. "The
decision to resume operations reflects a calculated risk, betting on the
success of a new multinational maritime task force, Prosperity Guardian,
commissioned to safeguard the region."

Renewed threats to Red Sea shipping lanes could reverse the selling seen over
the last 24 hours, said Phil Flynn, analyst at Price Futures Group, in a
Thursday note.

Oil failed to get a sustained lift after the Energy Information Administration
said U.S. crude inventories fell by 6.9 million barrels in the week ending
Dec. 22. Gasoline inventories declined by 600,000 barrels, with distillate
stocks up by 800,000 barrels.

Analysts surveyed by S&P Global Commodity Insight had, on average, expected a
3.5-million-barrel drop in crude inventories for the week ending Dec. 22.
Gasoline supplies were anticipated to rise by 710,000 barrels, with
distillates expected down 50,000 barrels.

The American Petroleum Institute late Wednesday reported that U.S. crude
inventories rose 1.8 million barrels last week, according to a source citing
the data. < This may be why the EIA announced large inventory decline was "questioned".

The EIA also reported that natural gas in storage declined by 87 billion cubic
feet in the week ending Dec. 22. Analysts surveyed by S&P Global Commodity
Insights had forecast a withdrawal of 78 billion cubic feet. < Driving ngas higher was the cold January weather forecast for Eastern U.S.

Natural-gas futures were lifted after NOAA's eight-to-14-day temperature
outlook said below-average temperatures are expected for the southern half of
the lower 48 states through Jan. 10, which should provide some strength to
heating demand, Victoria Dircksen, commodity analyst at Schneider Electric,
said in a note.

-William Watts

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