U.S. oil benchmark pulls again from 7-year excessive as crude bulls take a breather
An early version of this column contained a false reference to Wednesday’s US oil price settlement. WTI crude oil hit its highest level in seven years on Wednesday.
Oil futures pulled back from multi-year highs on Thursday, with analysts citing profit-taking after running to multi-year highs.
“While some projections are as bullish as $ 100, current price levels already feel high to traders who are always eager to take advantage of soaring prices,” said Louise Dickson, senior oil market analyst at Rystad Energy , in a note.
“Traders with a $ 86 sales threshold took the opportunity to already reap some profit and oil prices fell as a result,” she said.
West Texas Intermediate Crude Oil for December delivery CL00, -1.32% CLZ21, -1.32% fell $ 1.11, or 1.3%, to $ 82.31 a barrel on the New York Mercantile Exchange after the November contract expired on Wednesday at a seven-year high. December Brent crude BRN00, -1.29% BRNZ21, -1.29%,
The global benchmark lost $ 1.01, or 1.2%, to $ 84.81 a barrel on ICE Futures Europe after hitting its highest level since October 2018 on Wednesday.
Profit-taking aside, crude oil still looks optimistic for the rest of the year, Dickson said, thanks to increasing demand and tight production policies by the Organization of Petroleum Exporting Countries and its allies, a group known as OPEC +.
OPEC + members struggled to hit production quotas after agreeing this summer to relax existing production cuts in monthly increments of 400,000 barrels per day.
On Wednesday, crude oil futures were lower in early trading before rebounding after government data showed an unexpected weekly decline in US crude oil inventories. Gasoline and distillate stocks, which also include heating oil, also fell.
On Thursday, gasoline RBX21 lost -0.75% in November, up 0.4% to $ 2.499 per gallon, and heating oil HOX21 in November, lost 1.48%, down 1.2% to $ 2.56 per gallon.
“The EIA recorded a combined crude and product purchase of nearly 10 million barrels for commercial stocks, with an additional draw from strategic reserves,” said Robbie Fraser, Schneider Electric’s global research and analytics manager, in a daily note.
Also, crude oil stocks “are well below normal for this time of year” and “will need months of stronger supply / demand equilibrium before they match the five-year average,” he said.
Also on Nymex, natural gas futures extended their early declines after the EIA reported Thursday that domestic natural gas shipments rose 92 billion cubic feet for the week ended October 15. That was slightly more than the average increase of 88 billion cubic feet projected by analysts surveyed by S&P Global Platts.
November NGX21 natural gas, -1.28%, traded at $ 5.092 per million British thermal units, down 1.5%.
Weekly supply increased compared to a five-year average increase of 49 Bcf and an increase of 69 Bcf for the same week a year ago, according to S&P Global Platts.