Written Commentary
CRUDE OIL
February Crude Oil is higher this morning, with market buoyed by reports that Chinese authorities have agreed to issue 3 trillion yuan ($411 billion) worth of special treasury bonds next year, the largest on record. This reinforces indications earlier this month that China was willing to aggressively stimulate their economy. The API report on Tuesday showed US crude oil stocks -3.2 million barrels last week, which was bullish against expectations calling for -1.9 million. Gasoline stocks were +3.9 million versus -1.1 million expected, and distillate stocks were -2.5 million versus -0.3 million expected. The EIA report will be released Friday. Refinery runs are expected to be -0.4% to 91.4%. As of last week’s update, EIA US crude oil stocks were 421.0 million barrels versus 443.7 million a year ago and a five-year average of 447.4 million.
NATURAL GAS
March Natural Gas appeared to hit a wall at the 200-day moving average this morning. The market has been approaching that line for the past several sessions, and its failure to push through it today attracted sellers. The nearby futures reached their level in nearly two years, with the January futures are trading roughly 0.500 higher than the February contract. The weather is expect to turn more seasonal over the lower 48 next week after the unseasonably warm conditions this week. The 6-10 day forecast has near normal conditions expected across a wide swath of the country, with warmer than normal condition retreating to the southwest and northeast. The 8-14-day has below normal conditions stretching from the mid-Atlantic to Florida and westward into Missouri, Arkansas, and Louisiana. For the EIA storage report on Friday, the Reuters poll calls for a draw of 99 to 100 bcf. US storage has seen seasonal but substantial draws over the past two weeks, which has allowed the surplus to fall to 1.3% above a year ago.
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