Crude Oil Prices in 2023: Yearly Loss Forecasted

Crude oil prices are projected to end 2023 with a yearly loss, despite spending most of the last trading day with positive momentum. On the final day of 2022 action, the front-month West Texas Intermediate crude contract settled at $80.26 per barrel (bbl), indicating an anticipated drop of at least $8 per barrel (bbl) when the final settlement occurs this afternoon at 2:30 p.m.

Lackluster Performance in Crude Oil Benchmarks

Crude oil benchmarks experienced minimal activity throughout the day. Although there were initial gains of 50-70 cents per barrel (bbl) early in the day, they later transformed into more modest increases of 10-30 cents per barrel (bbl) by midday.

• The February WTI stood at a marginal increase of 15 cents per barrel (bbl), reaching $71.92 per barrel (bbl).
• In contrast, March Brent crude saw a slight gain of 23 cents per barrel (bbl), commanding a price of $77.38 per barrel (bbl).

Limited Enthusiasm for Refined Products

While refined products displayed higher prices, there was noticeable hesitancy in pursuing further increments. Regions such as New England and the Middle Atlantic are yet to encounter significant winter weather, and the 8-14 day weather forecast suggests that temperatures will remain near normal.

Consequently, ULSD (Ultra-Low Sulfur Diesel) futures failed to gain substantial traction. January contracts witnessed a slight increase of 1.89 cents per gallon (gal), reaching $2.5752 per gallon (gal), while February experienced a modest rise of 1.02 cents per gallon (gal), reaching $2.5505 per gallon (gal).

Gasoline Demand on the Rise

The latest data from the U.S. Energy Information Administration reveals a promising trend in gasoline demand. Based on the assessments made in October, it appears that there has been a small renaissance in this area. While weekly estimates initially indicated a gasoline demand of around 8.87 million b/d, the recently published numbers show a figure of 9.094 million b/d. This is the highest recorded demand for October since 2019.

Looking ahead, many gasoline traders anticipate that at least one of the next two weeks will witness demand slightly exceeding 8 million b/d. This is significant considering that refineries and blenders are currently producing over 17 million b/d of crude and feedstock processing, resulting in a surplus of 10 million b/d. However, despite this high production rate, consumption remains 2 million b/d lower.

One positive aspect for Gulf Coast refiners is the continued export demand, which consistently exceeds the rate of imports by one or two cargoes per day.

In terms of pricing, the January RBOB contract concludes today with prices rising to $2.1172/gal, experiencing a 3.2 cent increase. Additionally, the February contract shows an upward trend at $2.129/gal, marking a 2.93 cent surge.