Oil futures: Crude nudges higher, impact of cold snap monitored

Quantum Commodity Intelligence - Crude oil futures Monday were marginally higher, as cold blasts in the US and Europe underpinned the firm start to 2025.

Front-month Mar25 ICE Brent futures were trading at $76.62/b (1720 GMT) versus Friday's settle of $76.51/b. although off from the intraday high of $77.50/b.

At the same time Feb25 NYMEX WTI was trading at $74.03/b, versus Friday's close of $73.96/b and a high of $74.98/b.

Investors are closely monitoring the impact of colder weather across much of the northern hemisphere, particularly the US, which had helped lift benchmarks to the highest level since mid-October.

"Widespread temperatures 12-25 degrees Fahrenheit below typical early-January values are projected to expand across much of the central and eastern United States," said AccuWeather.

Meteorologists said the storm is driven by a polar vortex, which is also dropping temperatures across Europe.

Several US states have declared a state of emergency, but demand could also suffer, as thousands of flights and air and road travel plans have been cancelled.

Fundamentals

A tighter Middle East market was also helping the broader fundamental outlook amid speculation the incoming Trump administration will tighten sanctions on Iran.

"The oil market is off to a strong start in 2025 with ICE Brent trading above $76/b. This is despite the oil balance for 2025 looking comfortable," said Warren Patterson, head of ING's commodity research.

"The strength in the market appears to be on the back of a stronger physical market in the Middle East. This is well reflected in the Brent/Dubai spread, which has traded into negative territory recently," added Patterson.

Meanwhile, additional economic stimulus from China is expected to underpin fuel demand in the world's largest crude importer, rolling out significant funding through ultra-long-dated treasury bonds in 2025.