Written Commentary
CRUDE OIL
April Crude Oil is lower this morning and is back in the vicinity of yesterday’s seven-week low. President Trump said yesterday that the tariffs against Canadian and Mexican imports scheduled to start on March 4 are “on time and on schedule.” This would affect Canadian and Mexican oil imports into the US Analysts and cause disruption to US supply, especially for refiners in the Midwest that are heavily dependent on Canadian oil. Trump also said yesterday that he wants the Keystone XL Pipeline built, and he pledged easy regulatory approvals for the project. The pipeline was first proposed in 2008 to bring oil from Canada’s Western tar sands to US refiners and was halted in 2021 by the Biden Administration. The Trump Administration also hit Iran with the second set of sanctions this month, this time hitting oil brokers in the United Arab Emirates and Hong Kong, tanker operators and shipping companies in India, and the head of Iran’s National Iranian Oil Company. China does not recognize U.S. sanctions, and Chinese firms buy the most Iranian oil. The two nations have built an alternative trading system that uses mostly Chinese yuan and avoids the dollar and exposure to US regulators.
NATURAL GAS
April Natural Gas is higher this morning but inside yesterday’s range down. Mild weather has retuned the US mid-section, and the 6-10 and 8-14 day forecasts show that trend continuing over the next two weeks. This is in sharp contrast to the extreme cold of recent weeks that sent demand higher and US storage levels down. Early guesses for the EIA storage report call for withdrawals of -287 to -263 bcf last week, which could be the last significant withdrawal for a while. In their annual report, Shell said they expect global demand for LNG to rise some 60% by 2040, driven largely by economic growth in Asia, AI impact and efforts to cut emissions in heavy industries and transportation.
PRODUCT MARKETS
April ULSD is near unchanged this morning after attempting to push above short-term resistance at the 9-day moving average overnight. A warming trend in the US undercuts support after the extreme cold supported demand in recent weeks. Some areas of the Northeast, the main heating oil consumption areas are still showing colder than normal temperatures but not nearly as extreme.
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