Written Commentary
CRUDE OIL
January Crude Oil was near unchanged early Wednesday, trading in a narrow range either side of Tuesday’s close. The API report released late Tuesday showed US crude oil stocks fell 1.86 million barrels for the week ending November 21, which was a little bullish against an average expectation from a Reuters poll calling for an increase of 55,000. API gasoline stocks were up 539,000 barrels versus expectations for an increase of +600,000, and distillate stocks were up 753,000 versus +700,000 expected. On the whole, the report was close to expectations. The EIA report will be released today, Wednesday, at the normal time. In addition to the expectations listed here, refinery runs are expected to be +0.8% to 90.8%. Sources inside OPEC+ told Reuters that the group is not expected to make any changes to its first-quarter quotas when they meet on Sunday. They raised their output targets by around 2.9 million bpd from April to December and, and they paused any additional increases for first quarter of 2026 when they met in November. President Trump said he directed his representatives to meet separately with Russian President Vladimir Putin and Ukrainian officials. A Ukrainian official said Zelenskiy could visit the US in the next few days to finalize a deal. Comments from Putin yesterday suggested he was resistant to anything other than the framework already laid out between Russia and the US but that does not appear to have deterred the guarded optimism regarding the chances for a deal to be reached.
PRODUCTS
The API report was mostly neutral for the products as it US crude gasoline stocks were up 539,000 barrels for the week ending November 21, versus expectations for an increase of +600,000 and distillate stocks up 753,000 versus +700,000 expected. The EIA report will be released today, Wednesday, at the normal time. As of last week’s report, gasoline stocks were the lowest for this point in the season in at least six years and the prior week they were the lowest overall in at least six years. Gasoline and distillate stocks have a seasonal tendency to bottom around this time of year. Tuesday’s Commitments of Traders Report showed managed money traders were net sellers of 7,201 contracts of RBOB for the week ending October 14, reducing their net long to 35,162, which is towards the middle of the historic range. For ULSD, managed money traders were net sellers of 6,441 contracts, reducing their net long to 11,856, their lowest since June 3 an approaching a neutral position. January RBOB was higher this morning but inside Tuesday’s wide, range down action, while January ULSD was approaching Tuesday’s four-week low. A peace deal would have negative implications for prices as it would open up Russian supply and stem the loss of refinery capacity from Ukraine drone strikes.
NATURAL GAS
January Natural Gas was higher early Wednesday, managing to take back a good portion of Tuesday’s losses. The weather forecast for the US shows the potential for strong heating usage over the next couple of weeks. The 6-10-day forecast has the cold wave settling in over the upper Midwest, with much below temperatures over Wisconsin and far northern Illinois and emanating outward from there for December 1-5. The 8-14-day is milder but still colder than normal across the northern US, from the Plains to the East Coast. World Weather Inc. says some warming is expected during the middle and latter part of next week, but that will induce new waves of snow, rain and freezing rain evolving from the central US to the Atlantic Coast. For the EIA storage report today, the Reuters poll has an average expectations calling for a net draw of 2 billion cubic feet for the week ending November 21 (range -11 to +8). The five-year average change for the week is for a 22-bcf draw (range -81 to +10). The report will be out this morning (Wednesday) at 11:00 AM central time due to the Thanksgiving holiday tomorrow. Last week’s report showed storage was down 0.6% from a year ago and 4.1% above the five-year average. This was the first time storage had declined since March. US production continues to run at a record pace, which helps mitigate the anticipated demand. LSEG said on Tuesday that average gas output in the Lower 48 states had risen to 109.7 billion cubic feet per day so far this month, up from 107.4 bcfd in October and a record 108.3 bcfd in August. They put Monday’s production at 111.2 bcfd, also a new record. LSEG also projected average gas demand in the Lower 48 states, including exports, would rise from 122.0 bcfd this week to 140.4 bcfd next week. Average gas flows to the eight big LNG export plants operating in the US have risen to 18.0 bcfd so far this month, up from a record 16.6 bcfd in October.
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