Monday, December 14, 2015

Oil futures snap ugly 6-session losing streak


Natural-gas prices mark lowest settlement since 2001

U.S. oil prices finished higher for the first time in seven sessions, scoring a rebound from Monday’s lows under $35 a barrel.

The rebound for crude-oil prices comes despite concerns that a climate deal in Paris may hurt long-term oil demand.

Natural-gas prices, meanwhile, plunged to their lowest settlement since 2001 as warmer weather and hefty supplies sent prices tumbling.

Crude oil for delivery in January CLF6, +1.94%  tacked on 69 cents, or 1.9%, at $36.31 a barrel on the New York Mercantile Exchange, after tapping a low of $34.53 a barrel. Prices had posted declines in each of the past six trading sessions to tally a loss of roughly 13% since the close of $41.08 a barrel on Dec. 3.

“As speculative short positions reach a record…and as WTI gets within a whisker of the low made in late 2008, it seems prices are ripe for an oversold bounce,” said Matthew Smith, director of commodity research at ClipperData. “Whether it can be maintained is another matter.”

January Brent crude LCOF6, -0.18%  on London’s ICE Futures exchange, however, settled at $37.92 a barrel, down by a penny to hold at its lowest level since December 2008.

Analysts gauged the potential impact on oil from a historic climate deal that was signed in Paris over the weekend.

Read: These are the stocks for playing climate change
Following the climate agreement, “the pressure upon hydrocarbons just got bigger and badder, therefore opening up some huge risks to the downside, which could be difficult for the market to anticipate,” said Richard Hastings, macro strategist at Seaport Global Securities. “The situation is getting downright historic.”

On Monday, however, “contract expirations are making some noise…but that noise could easily turn to the downside on Wednesday and Thursday, depending upon other factors,” he said.

January Brent crude futures expire on Wednesday. January futures contracts for WTI oil expire in a week. Year to date, prices for both types of crude have lost more than 30%.
‘The selloff on the oil market has meanwhile taken on ludicrous dimensions.’
Commerzbank analysts
The selloff on the oil market has “taken on ludicrous dimensions,” analysts at Commerzbank said in a note. 

Meanwhile, Amir Hossein Zamaninia, Iran’s deputy oil minister for international and commerce affairs, told Bloomberg there is “absolutely no chance” the country will hold off plans to lift crude exports. He said it is prepared for the “worst scenario” for oil prices.

Back on Nymex, January gasoline RBF6, -2.44%  shed 2.6 cents, or 2%, to $1.256 a gallon, while January heating oil HOF6, -1.80%  lost 1.8 cents, or 1.6%, to $1.128 a gallon. 

Also on Nymex, natural-gas futures suffered their fourth straight session drop on Monday.

Temperature forecasts “continued to push off the eventual arrival of winter cold,” said Tim Evans, energy analyst at Citi Futures. 

January natural gas fell 9.6 cents, or 4.8%, to end at $1.894 per million British thermal units after a low at $1.862. Prices dipped to intraday levels not seen since January 2002, and based on the most-active contracts, prices haven’t settled at a level this low since September 2001, according to data from FactSet.

— Barbara Kollmeyer contributed to this article

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