As a cold front approaches the United States and traffic is expected to spike throughout the holiday season, U.S. crude, heating oil, and jet fuel stockpiles were considered as tight on Thursday, driving up oil prices for a fourth straight day. At 01:45 GMT, Brent crude futures increased by 27 cents, or 0.3%, to $82.47 a barrel, extending gains of almost 2.7% from the previous session. U.S. West Texas Intermediate (WTI) crude futures increased by 35 cents, or 0.5%, to $78.64 a barrel.
Both benchmark futures increased on Wednesday as official data revealed that U.S. crude stockpiles dropped by 5.89 million barrels for the week ending December 16, significantly more than analysts had predicted. In contrast to predictions for an increase, distillate stocks—which include heating oil and jet fuel—declined at the same period.
With a major winter storm anticipated to strike the United States and bring record-breaking low temperatures to Florida and the eastern states as well as sub-zero wind chills as far south as Texas, the inventories are dwindling just as demand for heating oil is projected to skyrocket. A post-COVID surge in travel for the holiday season is predicted to increase jet fuel usage as well.
Baden Moore, head of commodity analysis at National Australia Bank, stated that “by our numbers, the crude market is well balanced.” As we look ahead to 2023, we anticipate that China’s re-opening and a probable sustained steady roll-up in global jet demand (towards 2019 levels) will tighten global petroleum markets and raise prices. Oil prices have also increased as a result of a weaker US dollar, as buyers holding other currencies may purchase petroleum at a lower price.