Coquest

Your Daily Energy Report for January 6, 2025

Posted on 2025-01-06

Crude Oil

Crude Oil futures for February settled down -$.40 or -.541% at $73.56. Oil prices declined on Monday, snapping a five-day winning streak. Earlier in the session, prices were on track to hit a 12-week high, buoyed by a 1.1% drop in the US dollar, which had weakened on speculation that President-elect Trump might impose tariffs limited to critical imports. However, the dollar regained strength after Trump denied the report, tempering oil's gains. A stronger dollar tends to make oil more expensive for holders of other currencies. Additionally, weak economic data weighed on demand expectations. In the US, factory orders decreased in November due to reduced demand for commercial aircraft and slower growth in business equipment spending. In Germany, annual inflation exceeded forecasts in December, driven by rising food prices and a smaller-than-anticipated decline in energy costs, signaling persistent inflationary pressures.
 

Natural Gas

Natural Gas futures for February settled up $.318 or -9.481% at $3.672. Natural gas prices surged today, bouncing back from an 8% drop on Friday. The rally was fueled by projections of severe cold weather across the central and eastern regions of the United States this month. Forecasts indicate temperatures could fall as much as 20°F below average, with significant ice storms and heavy snowfall likely to impact power infrastructure and transportation, particularly in areas like the Ohio Valley and Missouri. This month could mark the coldest January since 2011, driving up demand for natural gas and diesel. However, the weather is not expected to reach the severity of the deadly 2021 storm. Additionally, natural gas flows to US LNG export facilities are anticipated to remain strong, bolstered by the expiration of a Russia-Ukraine pipeline agreement.

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