Written Commentary
CRUDE OIL
April Crude Oil is sharply lower for the second straight day, and it has even taken out last Thursday’s five-week low. The selloff was triggered yesterday on news that President Trump had discussed the war in Ukraine in phone calls with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy, which were viewed as the first big step towards diplomacy over a war he has promised to end. Zelenskiy’s office said Trump and Zelenskiy had spoken by phone for about an hour. The CPI number yesterday came in surprisingly hot for January, stoking fears that a heating economy and looming tariffs could undercut hopes for rate cuts. In their monthly update, OPEC left its forecasts for global demand growth unchanged at +1.45 million barrels per day in 2025 and by 1.43 million in 2026. The EIA report was less bearish against expectations than the API numbers the previous day, with crude oil stocks +4.1 million barrels last week versus +9.0 million in the API numbers and expectations of +3.0 million. Gasoline stocks were -3.0 million versus +1.4 million expected, and distillate stocks were +100,000 versus -1.5 million expected. US crude stocks are no longer at six-year lows, but Cushing, OJK stocks are. Reuters reports that Russia may be forced to throttle back its oil output in the coming months as US sanctions hamper its access to tankers. Russia has little storage capacity, and Ukraine has attacked some of these facilities with drones in recent weeks. Trump has also said he could impose new sanctions on Russia if a peace agreement with Ukraine is not achieved.
NATURAL GAS
March Natural Gas gapped higher this morning and is approaching its 13-month high from January. Wintery weather in the US is boosting consumption and could be sending US supply to its lowest level for this time of year since 2022. World Weather Service says colder than normal conditions and higher than usual heating fuel demand will be most common through the next two weeks. The NWS 6-10 day forecast has below to much below temperatures from the Rockies to the East Coast, with near mostly normal temperatures westward. The 8-10-day shows warmer than normal from the Plains westward and less severe cold (but still colder than normal) from the Midwest to the Atlantic. LSEG said average gas output in the lower 48 states rose to 105.9 billion cubic feet per day so far in February, up from 102.7 in January, when freezing oil and gas wells and pipes, known as freeze-offs, cut production. However, extreme cold is again freezing wells in some parts of the country. Average gas demand in the Lower 48, including exports, could rise from 135.5 bcfd this week to 142.0 bcfd next week. LSEG added that the amount of gas flowing to the eight big US LNG export plants rose to an average of 15.2 bcfd so far in February, up from 14.6 bcfd in January.
PRODUCT MARKETS
April RBOB traded to its highest level since January 16 yesterday but quickly followed crude oil lower in the wake of the news about potential peace negotiations in Ukraine. This was despite a drop in US gasoline stocks last week and an improvement in implied demand. The gap lower overnight leaves initial resistance at 2.3132, followed by 2.3314. Look for support at 2.2595 and 2.2275. April RBOB is also following crude oil lower but is under a little less pressure, perhaps because of the cold weather in the US.
>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.
