Lower Trading Volume May Keep Prices Volatile Through the Holiday Season
December 22, 2021
Today is the last day to buy a contract his week. No contracts will be offered tomorrow Thursday, December 23, or Friday, December 24. Today is the last day to buy a forward contract until next Monday, December 27th.
The average estimates for the DOE inventory report from the Bloomberg survey are for crude inventories to be down 3.019 million barrels. Gasoline inventories are estimated up 105,000 barrels and distillates down 618,0000 barrels.
Prices could remain volatile over the holiday season due to much lower trading volume exacerbating price moves and also due to the uncertainty of fuels supply and demand.
The API came in with crude stocks down 3.7 million barrels, gasoline inventories were up 3.7 million barrels and distillates were down 849,000 barrels.
Oil and natural gas discoveries for 2021 are expected to be the lowest in 75 years which is mainly due to the fact of low investments into shale fracking and deep-sea drilling around the globe.
Omicron is still a concern to fuel demand. Germany is set to limit gatherings to ten people. Portugal is closing nightclubs and bars starting Saturday. All of this is not good news for energy demand.
Despite the above news in the US, there are signs of strong demand in the physical markets, where sweet shale crudes this week reached the largest premiums against NYMEX oil futures in nearly a year. The gains are driven by US refiners buying supplies to meet increased domestic fuel demand.
The estimate for today’s propane inventory update is for there to be a draw of 1.5 million barrels.