Latest News

Futures Movers: Oil prices fall to begin 2023 as China worries persist

0

Oil futures traded lower Tuesday to kick off the new year, reflecting continued worries that surging COVID-19 cases in China will crimp demand from one of the world’s largest energy consumers.

Traders were returning from a three-day weekend. U.S. and U.K. markets were closed Monday in observance of Sunday’s New Year’s Day holiday. The U.S. crude oil benchmark rose 6.7% in 2022, based on front-month contracts, according to Dow Jones Market data, while Brent crude, the global benchmark, rose 10.5%.

Price action

West Texas Intermediate crude for February delivery
CL00,
-3.30%

 
CL.1,
-3.30%

 
CLG23,
-3.30%

fell $2.75, or 3.4%, to $77.51 a barrel on the New York Mercantile Exchange, with front-month prices on track for the lowest settlement since Dec. 22, FactSet data show.

March Brent crude
BRN00,
-3.46%

 
BRNH23,
-3.46%

was down $2.93, or 3.4%, at $82.98 a barrel on ICE Futures Europe.

On Nymex, February gasoline
RBG23,
-4.16%

fell 3.9% to $2.3812 a gallon, while February heating oil
HOG23,
-3.88%

dropped 4.6% to $3.1421 a gallon.

February natural gas
NGG23,
-10.28%

dropped 10.7% to $3.996 per million British thermal units.

Market drivers

Crude oil had ended 2022 on a positive note, rising in Friday’s session. Investors have weighed optimism over the lifting of China’s strict COVID curbs, which were seen keeping a lid on demand from one of the world’s largest energy consumers, versus concerns over soaring infections.

On Tuesday, news out of China was “indicative of a slowdown as the country’s PMI fell at the fastest pace in nearly three years in December,” said Brian Steinkamp, commodity analyst at Schneider Electric, in a daily report. 

China’s official manufacturing PMI fell more than expected, to 47.0, in December, the lowest level since February 2020.

“The December survey data out of China were uniformly downbeat. The plunge in the official services PMI points to a fall in oil demand, but we suspect that the hit to industrial activity (and metals demand) has been more modest,” said Caroline Bain, chief commodities economist at Capital Economics, in a note.

A private gauge of activity in China’s manufacturing sector released Tuesday was in contractionary territory for a fifth straight month in December, as waves of infections disrupted businesses and undercut demand. China’s Caixin manufacturing purchasing managers index dropped to 49.0 in December from 49.4 in November, according to data released Tuesday by Caixin Media Co. and S&P Global. A figure below 50 marks a contraction in activity.

“Looking ahead, we expect China’s commodity demand to remain soft in Q1 given the ongoing downturn in the property sector, the wave of virus infections and sluggish export demand,” Bain said.

Meanwhile, Kristalina Georgieva, head of the International Monetary Fund, said on the CBS Sunday morning news program “Face the Nation” that this year is going to be tougher on the global economy than 2022. The IMF currently projects a global growth rate of 2.7% in 2023, slowing from 3.2% in 2022.

Financial Crime: Sam Bankman-Fried pleads not guilty in multi-billion dollar FTX fraud case

Previous article

TaxWatch: Brace yourself: Your tax refund could shrink in 2023. Here’s why.

Next article

You may also like

Comments

Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News