- Oil prices were climbing again early on Thursday morning, with both Brent and WTI more than $2 higher than they were at the start of the week.
- Cold weather is expected in the United States, with a storm forecast to bring more than a foot of snow and potential blizzards.
- As well as cold weather, a larger-than-expected inventory draw reported by the EIA and some bullish reports by analysts added to oil’s upwards momentum.
Crude oil prices were rising for the fourth day in a row today, pushed higher by colder weather in the United States in what has been described as a once-in-a-generation storm.
At the time of writing, Brent crude was close to $82.42 per barrel, with West Texas Intermediate at $78.56 per barrel. Although the daily increase was a modest one of less than a percentage point, it was part of a trend that started at the beginning of the week as weather forecasts from the United States.
The forecasts pointed to a winter storm moving towards North America which is likely to affect the whole of the U.S., bringing more than a foot of snow and possible blizzards, CNN reported earlier this week.
According to the report, the storm would likely interfere with people’s holiday travel plans. “Whiteout conditions are expected during that time with travel becoming very difficult or impossible,” the Denver weather service said, as quoted by CNN. “This event could be life-threatening if you are stranded with wind chills in the 30 below to 45 below zero range.”
In addition to the weather forecast, the latest weekly petroleum report of the U.S. Energy Information Administration also contributed to the oil price rise, by revealing a larger-than-expected inventory draw.
The draw followed a substantial weekly inventory build in excess of 10 million barrels but the fact it was surprisingly large apparently dampened the effect of the previous week’s inventory movements.
Forecasts for higher oil prices next year may also have contributed to the bullish mood. This week, S&P Global’s Daniel Yergin forecast that oil could rise to $121 per barrel next year as China reopens after its Covid lockdowns, and National Australia Bank also forecast higher prices citing China’s economic activity rebound next year.
“If China gets over Covid... then you add a lot of demand to the market,” S&P Global’s Yergin said this week.
"As we look into 2023, we see China's re-opening and a likely continued steady roll-up in global jet demand (towards 2019 levels) will tighten global crude markets and drive prices higher," said NAB’s head of commodity research Baden Moore, as quoted by Reuters.