Crude oil futures experienced a slight decline on Monday morning, despite market expectations of heightened demand for heating oil due to cold weather across the United States and Europe.
As of 9:57 AM, March Brent crude futures were trading at $76.33 per barrel, marking a 0.24% drop. Similarly, February West Texas Intermediate (WTI) crude futures stood at $73.81 per barrel, reflecting a 0.20% decrease.
On India’s Multi Commodity Exchange (MCX), January crude oil futures were trading at ₹6,341, down 0.50% from the previous close of ₹6,373. February futures were also down 0.44%, trading at ₹6,306 compared to their previous close of ₹6,334.
Winter Storm Fuels Demand for Heating Oil
The cold weather sweeping across the US and Europe is driving expectations of increased heating oil consumption. Reports indicate that a polar vortex is fueling a winter storm, bringing snow, ice, and sub-zero temperatures to the US. The weather system is also forecasted to lower temperatures across Europe, potentially bolstering crude oil demand.
China’s Economic Measures Aim to Revive Oil Demand
In other developments, China announced plans to stimulate economic growth through increased funding from ultra-long-dated treasury bonds. The Chinese central bank also hinted at reducing banks’ reserve requirement ratios and cutting interest rates at an opportune time.
As one of the world’s largest crude oil consumers, China’s economic struggles have weighed on global oil demand throughout 2024. However, analysts suggest that these measures could reignite crude oil consumption in the country, providing a boost to global demand.
Iran’s Output Expected to Decline in 2025
A report from Reuters revealed that Goldman Sachs projects a significant reduction in Iran’s crude oil production and exports by the second quarter of 2025. With Donald Trump set to re-assume the US presidency later this month, anticipated policy shifts and stricter sanctions could reduce Iran’s daily output by 300,000 barrels to an estimated 3.25 million barrels.
Gains in Natural Gas and Agricultural Commodities
While crude oil faced slight declines, natural gas futures rose significantly. January natural gas futures on MCX were trading at ₹303.40, up 4.69% from the previous close of ₹289.80.
Meanwhile, agricultural commodities also posted gains. January cottonseed oilcake futures on the National Commodities and Derivatives Exchange (NCDEX) increased by 1.57%, trading at ₹2,778 compared to the previous close of ₹2,735. April turmeric (farmer polished) futures rose by 1.08% to ₹15,588 from ₹15,422.
This mix of weather-driven demand, economic developments in China, and geopolitical factors continues to shape global energy and commodity markets.
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