Written Commentary
CRUDE OIL
January Crude Oil is near unchanged this morning after trading to its highest level since January 25 overnight. Trade may quiet down ahead of the OPEC+ meeting tomorrow, at which the members are expected to postpone their planned production increase until 2025. A Reuters survey indicated OPEC oil output rose for the second straight month in November as Libya’s production recovered from after their political crisis earlier this year. OPEC output increased to 26.51 million barrels per day, up 180,000 from October and about 16,000 bod above the implied target for the nine members. Geopolitical concerns remain a supportive factor, even though the Mideast war has had no effect on crude oil supply to date. Yesterday, Israel threatened to attack the Lebanese state if its truce with Hezbollah collapses. Israeli forces have continued strikes against what they say are Hezbollah fighters ignoring last week’s truce agreement in Lebanon. Chinese demand remains a long term concern.
The API report yesterday afternoon was bearish against expectations, especially for gasoline, but it did not move the market, as traders were awaiting today’s EIA report.
NATURAL GAS
January RBOB is higher this morning despite a sharp increase in API gasoline stocks last week, as the trade awaits official EIA data today. The trade is looking for moderate increases in gasoline and distillate stocks.
PRODUCT MARKETS
January Natural Gas extended this week’s selloff overnight and traded to its lowest level since November 15. A trend towards milder conditions over the next two weeks will limit consumption and could keep US supply from drawing down at a normal, seasonal pace. The 6-10 and 8-14 day forecasts call for above normal temperatures across most of the lower 48 states, with the exception of the central south, which will be near normal. No colder than normal temps are in sight. For the EIA storage report tomorrow, trade expectations range from -53 to +59 for last week. The five year average change for the week is -43 bcf, and a year ago, storage saw a draw of 117 bcf for the week. At no point in the last five years did it show an injection for this week. The smallest withdrawal was 1 bcf in 2020. Storage has a tendency to peak for the year around now. The cold weather may have helped contribute to a decline over the past week, but the forecast for a warming trend could keep withdrawals at a minimum. LSEG says lower 48 gas production rose to 102.3 billion cubic feet per day so far in December, up from 101.5 bcfd in November. Last December, production reached a record 105.3 bcfd.
>Interested in more futures markets? Explore our Market Dashboards here.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
