Energy futures contracts for crude oil, refined products and natural gas fell in the new year, amid short-term dealers' concerns about cold weather, supply shortages and selling contracts at bargain prices.
Prices rose last year due to fears that Europe would freeze due to a shortage of Russian fuel, at a time when “OPEC Plus” cut production targets and low stocks of American derivatives products raised the possibility of imposing restrictions on fuel exports.
These fears proved exaggerated, sending prices down.
The results of a Reuters survey indicated that European gas stocks rose to more than the usual seasonal levels.
Saudi Aramco this week lowered shipping rates for oil to Asia, while production from members of the Organization of the Petroleum Exporting Countries (OPEC) rose surprisingly last month.
Warmer-than-normal temperatures in the United States and Europe have also reduced the need for gas and oil for heating purposes.
Natural gas is declining
US natural gas fell 18% in the first week of this month, which is the largest recorded stumble at the beginning of any year, according to data from the company, "Ikon Refinitiv".
The 12% drop in oil-refining derivatives futures contracts was the biggest drop to begin the year since 1991.
The consumption of oil refining products usually increases due to the effect of winter demand.
WTI, Brent and US gasoline futures suffered their largest weekly decline at the beginning of the year since 2016, with WTI down 7.4%, Brent down 7.3% and US gasoline down 7.3%.
"Some of our biggest fears will not materialize in 2022," said John Kilduff, a partner at Again Capital in New York.
He added that although the excess capacity of OPEC is limited, traders see that there is additional supply coming from places including Brazil and Canada.
Brent crude futures fell 12 cents, or 0.2%, to settle at $78.57 a barrel on Friday, and US West Texas Intermediate crude rose 10 cents, or 0.1%, to $73.77 a barrel.
Stephen Brennock, an analyst at BVM, said that the oil market "may regain some calm after the big changes earlier this week, but the upside potential is still limited, at least in the near term, as the economic outlook is foggy."