Energy futures contracts for crude oil, refined products and natural gas fell into the new year as traders revisited short-term concerns about cold weather, supply shortages and forced contract sales.
Prices rose last year on fears that Europe would lock down due to shortages of Russian fuel, at a time when OPEC+ cut production targets and lower stockpiles of US derivatives boosted the prospect of imposing restrictions on fuel exports.
These fears proved exaggerated, sending prices plummeting. The results of a Reuters poll indicated that European gas inventories rose above usual seasonal levels, Saudi Aramco this week cut tariffs on oil shipments to Asia and production by members of the Organization of the Exporting Countries of oil (OPEC) increased surprisingly last month.
Warmer-than-normal temperatures in the United States and Europe have reduced the need for gas and oil for heating.
U.S. natural gas fell 18% in the first week of this month, which is the largest slump recorded at the start of any year, according to data from Eikon Refinitiv. The 12% decline in oil derivatives futures contracts was the largest year-to-date decline since 1991. Consumption of refining oil derivatives typically increases due to impact of winter demand .
West Texas Intermediate crude, Brent crude and U.S. gasoline suffered the biggest weekly declines to the start of the year since 2016, with West Texas Intermediate crude falling 7.4%, Brent crude 7.3% and US gasoline by 7.3%.
