Crude oil prices continued their retreat Friday as the market remained unimpressed by production cuts announced Thursday by OPEC+. WTI dropped $1.89 to close at $74.07/bbl, while Brent fell by $1.98 to settle at $78.88/bbl. Both benchmarks fell by nearly 2.5%. The OPEC+ group announced voluntary production cuts of about 2.2 MMb/d for Q1 2024 but most of those cuts — at least 1.3 MMb/d — are already in effect by Russia and Saudi Arabia. The war between Israel and Hamas resumed Friday after a cease-fire, but there appeared to be no appetite for a risk premium in the market. In the U.S., Federal Reserve Chair Jerome Powell said Friday that the central bank would carefully evaluate any changes to interest rates as it continues to monitor inflation.
The Henry Hub January contract ticked up by 1.2 cents to settle Friday at $2.814/MMBtu, the first increase this week. Prices have moved lower this week on moderate weather and a bearish storage report from the EIA. Today’s change to the weather forecast is more bearish for the near-term demand outlook, adding a net 15 Bcf to storage in our model projections through the week ended December 29. The National Weather Service’s 8-14 day outlook calls for above-average temperatures for the eastern two-thirds of the country, an indication that the U.S. should avoid Arctic cold through at least midmonth.