Crude Futures Lower With Mideast, Fed Comments in View
February 23, 2024
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February 23, 2024Oil futures end higher in rangebound trading
Natural-gas futures ended sharply higher Wednesday after Chesapeake Energy Corp., a major shale producer, cut its production outlook. The rebound came after natural gas ended the previous session at its lowest level in more than three-and-a-half years.
Meanwhile, crude-oil futures finished higher in rangebound trading as investors monitored developments in the Middle East and weighed the outlook for global crude demand.
Price moves
- March natural gas NGH24, -6.00% jumped 12.5% to close at $1.773 per million British thermal units, after ending Tuesday at the lowest settlement for a front-month contract since June 26, 2020. Wednesday’s rise was the largest one-day percentage gain since July 7, 2022.
- West Texas Intermediate crude for April delivery CL00, -2.49% CL.1, -2.49% CLJ24, -2.49% rose 87 cents, or 1.1%, to close at $77.91 a barrel on the New York Mercantile Exchange.
- April Brent crude BRN00, -2.10% BRNJ24, -2.25%, the global benchmark, advanced 69 cents, or 0.8%, to settle at $83.03 a barrel on ICE Futures Europe.
- Back on Nymex, March gasoline RBH24, -2.50% rose 0.4% to end at $2.286 a gallon, while March heating oil HOH24, -2.26% fell 1% to $2.705 a gallon.
Market drivers
In its fourth-quarter earnings report, Chesapeake Energy CHK, -1.28% said its capital plan would support production this year in the range of 2.65 billion to 2.75 billion cubic feet a day, or bcf/d. Chesapeake produced the equivalent of 3.43 bcf/d in fiscal 2023, 98% of which was natural gas.
“Soaring production and mild temperatures have allowed prices to plummet under $2, and with short-term temperature forecasts predicting warm weather dominating most of the eastern U.S. and dampening heating demand, more producers will need to announce similar cuts to keep the upward trend alive,” said Victoria Dircksen, commodity analyst at Schneider Electric, in a note.
Natural-gas prices remain down 15.6% in February alone and have dropped nearly 30% this year, despite the Wednesday bounce. Natural gas has suffered “on the back of burgeoning domestic natural-gas production, above-average storage levels and a warmer-than-normal weather forecast through to the end of February,” Lu Ming Pang, senior analyst at Rystad Energy, said in a note.
See: Natural-gas prices at lowest since 2020 on mild weather, ample supply ‘double whammy’
Analysts said continued attacks on shipping vessels in the Red Sea and the Bab al-Mandab strait by Yemen’s Iran-backed Houthi militants remained a concern. Traders were also tracking efforts toward a cease-fire in the Israel-Hamas war.
The U.S. vetoed an Arab-backed U.N. resolution Tuesday demanding an immediate humanitarian cease-fire in the Israel-Hamas war in Gaza. The Biden administration had said it would veto the resolution because of concerns that it would interfere with efforts to arrange a deal between the warring parties aimed at bringing at least a six-week halt to hostilities and a release of all hostages.
Oil prices traded near the top of a three-week range last week on rising geopolitical worries, but gains were capped after the International Energy Agency left its outlook for demand growth in 2024 unchanged, said Peter Cardillo, chief market economist at Spartan Capital.
“Barring any major geopolitical uprise in the war between Israel and Gaza, we remain neutral on oil prices that we see remaining stuck between the $72-$78 range,” he said.
Associated Press contributed.
