Rumors That Beijing Will Ease Restrictive Protocols Seemed Reason Enough For Trader To Push WTI Futures Higher Last Week

Whether or not China will ease its COVID lockdowns are broadly taking credit for the last week of crude oil price action. Rumors that Beijing will ease restrictive protocols seemed reason enough for trader to push WTI futures higher last week, while the news over the weekend that the status quo will be maintained for now has oil prices sinking modestly to start today. Both American and European oil futures are trading down .6% this morning.

Good news for our friends across the pond: warmer-than-expected temperatures are forecast for the next couple of weeks and are expected to dampen natural gas and heating oil demand. While that may mean good news for Europeans using those products to heat their homes, distillate prices in the New York Harbor market are still seeing premiums approaching $1 per gallon over the prompt month futures contract. It doesn’t look like the Northeast will see any price relief on diesel and/or heating oil until the trans-Atlantic arbitrage window has closed.

Open interest in WTI crude oil futures was the only one that rose last week and traders continued to shy away from participating in energy markets to the extent we’ve grown accustomed to over the past few years. The mix of ‘who thinks the markets’ going where’ shifted however, with the “smart” money increasing their net long positions in crude oil futures, increasing their bets on higher prices.

Tropical Storm Nicole is currently churning just west of the Bahamas, and is expected to make landfall on Florida’s east coast early Thursday morning. The NHC graphic currently shows Nicole maintaining it’s storm status ahead of its mainland impact, but mentions that there is a possibility for it to develop into a Hurricane before hitting the Bahamas. Regardless of what we call it, heavy rains, coastal flooding, and strong winds are all expected along the storm’s path. Impact to US energy infrastructure is expected to be minimal at this time.

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