Written Commentary
CRUDE OIL
April Crude Oil is higher this morning but inside the range of the past three sessions. The market fell under pressure this week from the prospects of a “peace deal” being worked out between Ukraine and Russia, but nothing has been announced. The prospects of a peace deal would open up Russian crude supply which has been reduced recently due to a stiffening of sanctions. New pressures could emerge on Iranian supply. The reciprocal tariffs on the table, but implementation is not imminent. The market has come to view the tariffs as “negotiation tactics” and is less inclined to react on headlines. An IEA report said emerging and developing economies are expected to account for 85% of global demand growth, with China forecast to make up more than half of the gains with a 6% growth rate year-on-year to 2027. They also said some advanced economies like the US are seen reversing previously stagnant demand as electrification grows rapidly for sectors like transport and data centers.
NATURAL GAS
March Natural Gas is higher this morning but inside yesterday’s wide range. After taking out January’s 26-month high yesterday, the market closed well off its highs but still higher on the day. The weekly EIA storage report showed a net draw of 100 bcf last week, which was within expectations, but it also showed supply continuing to dwindle, with storage now down -9.2% from a year ago and -2.0% below the five-year average versus -7.2% and -2.9% the previous week. The weather forecast shows a gradual warming trend over the next couple of weeks, but we have to get through some frigid weather before that happens, and this should keep supply falling. The 6-10-day forecast below normal temperatures over most of the lower 48, except for the far west. Much below normal temps are centered over a wide swath of the Midwest. The 8-14-day has above normal temperatures covering the western half of the nation with below normal (but not as severe) temps in the eastern half. The long term demand trend looks positive given climbing electricity demand in the US and increasing capacity for LNG exports.
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