Oil prices rise on China demand, natural gas gains on colder weather.
Oil prices rose on Tuesday, buoyed by continued optimism surrounding demand from China as they ease COVID restrictions. Natural gas also extended its gains, as forecasts point to colder weather in the US. West Texas Intermediate crude for March delivery rose 0.3% to $81.85 a barrel on the New York Mercantile Exchange, while March Brent crude, the global benchmark, gained 0.1% to $88.32 a barrel on ICE Futures Europe. February gasoline dropped 0.6% to $2.68 a gallon, while February heating oil rose 0.4% to $3.452 a gallon. February natural gas rose 2.6% to $3.538 per million British thermal units.
The main drivers of the market have been expectations for a pickup in crude demand from China, a weaker US dollar, and other commodities such as copper seeing more substantial gains than crude oil. Copper has risen 12% since the start of the year, while WTI and Brent are up 2.1% and 2.8% respectively. Natural gas has rebounded after a sharp slump at the start of the year due to unseasonably warm weather, but is still down 20%.
The market is expected to remain volatile, with the possibility of squeezy rallies, but the trend is currently bearish. A break below $3.00 is a distinct possibility in the coming months. Optimism surrounding China’s reopening and a weaker US dollar have provided support for oil prices, but gains remain underwhelming compared to other commodities. Natural gas has rebounded from a slump, but is still down significantly from the start of the year. The market is expected to remain volatile, with the possibility of squeezy rallies, but the trend is currently bearish.