Traders Bet On Winter Freeze To Boost Demand, But Oil Prices Remain Flat

Meanwhile, analysts continue to discuss the Trump effect: File Image/Pixabay

Sparse oil trading as 2024 wound down was driven by investors betting that cooler temperatures in the U.S. and Europe would boost diesel demand; however, this failed to produce any substantial change in prices, with two key benchmarks rising by only a fraction of a percent.

Brent settled up 22 cents at $74.39 per barrel, while West Texas Intermediate settled up 39 cents at $70.99 per barrel.

The positive settlements were inspired by LSEG disclosing that heating degree days (a measure of energy demand for space heating), are expected to rise by 100 points to 499 over the next two weeks in the U.S., with similar outcomes expected in Europe.

In fact, temperatures in the UK, France, and Germany are expected to plunge at the end of this week, at a time when Europe is reportedly consuming fuel at the fastest pace in years.

As for  trading over the next few sessions, given that Brent and WTI rose last week due to a larger than expected draw of U.S. crude inventories, the same effect is expected this week as a Reuters poll on Monday forecast that stocks will have likely fallen by another 3 million barrels.

However, the Reuters polls are notoriously unreliable, and given that any bullish news of late fails to move oil prices to any meaningful degree, expect the commodities to remain range bound.

As the New Year approached, analysts were inclined to expand their forecasts well into 2025; and Bloomberg on Monday noted that “While a looming supply glut and tepid China demand are weighing on the market heading into 2025, investors are nevertheless positioning for upside risk as Donald Trump returns to the White House and conflicts in Ukraine and the Middle East continue to simmer.

“The US president’s position on major oil exporter Iran is a key wildcard for traders.”

In other oil news on Monday, China issued a second batch of import quotas for 2025, for a total of at least 152.49 million metric tones to independent refiners; oilprice.com theorized that “The fresh crude oil import quotas could spur purchases in 2025, especially if oil prices continue to be in the low $70s per barrel.”

Also on Monday, the start-up of the Sangomar oil field offshore Senegal in June has led to a record surge in that country’s economic growth: Senegal’s gross domestic product increased by 8.9 percent in the third quarter compared to the second quarter and by 11.5 percent compared to the same quarter of 2023, according to the National Agency of Statistics and Demography.