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Where are Energy Prices Heading in Q2?

Barchart - Tue Apr 16, 12:00PM CDT

In a January 12, 2024, Barchart article on the energy sector in 2023, I wrote:

Time will tell if the commodity asset class’s energy sector moves from laggard in 2023 to leader in 2024. Prices have dropped to attractive levels, with room for upside recoveries over the coming months.

Energy commodities mostly recovered in Q1 and were higher in early Q2. The oil market is heading into the 2024 peak driving season, while natural gas is moving into the 2024 injection season. 

Crude oil rallied and was higher in early Q2

WTI NYMEX crude oil futures fell 10.73% in 2023 before recovering and rallying 16.08% in Q1 2024. 

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The monthly chart highlights that nearby NYMEX crude oil futures settled at $83.17 at the end of Q1 and were higher at $84.64 per barrel on April 15.

Brent North Sea crude oil futures, the energy commodity’s other pricing benchmark, fell 10.18% in 2023 and rose 13.45% in Q1 2024. 

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 Brent crude oil futures closed Q1 at $87.45 per barrel and were slightly higher at $89.26 per barrel on April 15, 2024. 

Gasoline reflects seasonality, while heating oil edged higher

Gasoline is a seasonal commodity that tends to decline to lows during winter and rise to highs during the annual driving season in spring and summer. 

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The chart shows NYMEX gasoline futures, which declined 15.01% in 2023, rose 29.16% in Q1 2024, settling at $2.72060 at the end of March. At above $2.76 per gallon wholesale on April 15, gasoline was marginally higher in Q2. 

Heating oil futures, a proxy for other distillates, including diesel and jet fuels, fell 23.25% in 2023. 

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Heating oil futures edged 3.71% higher in Q1, settling at $2.62270 per gallon wholesale. At the $2.6410 level on April 15, heating oil was marginally higher than the Q1 closing level. 

Natural gas dropped but was higher in early Q2

Natural gas futures on the CME’s NYMEX division dropped 43.82% in 2023 and another 29.87% in Q1 2024. 

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The chart shows after settling Q1 at $1.763 per MMBtu, natural gas futures were slightly lower at around $1.721 on April 17. 

Coal was higher, while ethanol prices fell in Q2

ICE coal futures for delivery in Rotterdam, the Netherlands, were down 43.15% in 2023 but rallied 5.31% in Q1 2024. Nearby coal futures settled at $114.05 per ton at the end of March and the May futures were only marginally higher at $118.00 on April 15. 

In the U.S., the ethanol mandate requires blending gasoline with biofuel. Chicago ethanol swaps, which moved 28.11% lower in 2023 were down another 1.79% in Q1 2024. Nearby ethanol settled at the $1.6450 per gallon level at the end of March and the May swaps were slightly higher at the $1.6600 level on April 15. 

The factors supporting traditional energy commodities in Q2 and beyond

Energy prices mainly moved higher in Q1, and the path of least resistance remained marginally bullish in early Q2. The following factors support traditional energy futures prices over the coming weeks and months:

  • The 2024 peak driving season will increase the gasoline demand, translating to more demand for crude oil. 
  • The war in the Middle East threatens the worldwide petroleum supply chain, which could cause periodic supply fears and price rallies. Iran’s attack on Israel and the potential for a response will add volatility to oil prices. 
  • The U.S. Strategic Petroleum Reserve is around 40% below the November 2021 level. The U.S. has less ammo to combat rising oil prices than in 2022. 
  • China and India remain significant global energy consumers. Any improvement in China’s economy could raise oil prices significantly.
  • The trend is always your best friend in markets, and most energy commodities are trending higher in early Q2 2024. 

Many factors support higher oil and oil product prices over the coming weeks and months. Natural gas could be another story as the most volatile energy commodity moves into the injection season during the shoulder months when heating and cooling demand declines. However, the substantially high open interest level could mean a recovery rally is on the horizon, as speculators have been overwhelmingly short natural gas futures. 

Coal will follow oil and gas prices, and ethanol will track gasoline and corn prices in the United States, as coarse grain is the primary ingredient in biofuel. Markets reflect the economic and geopolitical landscapes, supporting higher energy prices over the coming weeks and months. 


On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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