Energy Prices Touch Three-Week Highs
December 17, 2021
Energy prices closed at a three-week high yesterday on the news of the EIA inventory report showing a decline in crude oil stocks and strong numbers in implied demand for gasoline and diesel fuel. The Fed news that they will speed up reducing monetary stimulus and then later raise interest rates was also supportive to the market. The increasing tension between Russia and Ukraine is adding to the geopolitical risk in the market. The market has given back most of those gains in overnight and early trading keeping these energy markets in a trading range.
The news of the omicron variant of COVID-19 is still a headwind for energy bulls. President Biden warned that the variant is here and spreading rapidly. He warned of winter of severe illness and death for those that are unvaccinated. France said it will ban tourists and almost all business travelers from Britain to slow the spread of the virus. Some Wall Street firms are again telling their staff to work remotely.
Europe’s crude imports from the US Gulf are expected to increase to a six-month high in December as wide WTI-Brent spread last month increased buying interest from Europe. According to tanker tracking data compiled by Bloomberg, 30 tankers carrying about 19.2 million barrels of oil have arrived in Europe so far this month after loading crude from terminals in the US Gulf. Another 24 tankers, hauling 17.4 million barrels are expected to arrive by the end of December. Total imports in December are estimated at 36.6 million barrels or 1.8 million BPD, the highest level since June, compared with a revised 1.03 million BPD in November.