CRUDE OIL
The crude oil market down for the second straight session off as reality has set in regarding demand prospects for next year. Last week crude oil rallied to a five-week high off ideas that aggressive monetary stimulus by the PBOC would finally spark a recovery in Chinese demand, but the market set back this week after Chinese retail sales data came in lower than expected on Monday. With the FOMC meeting tomorrow widely expected to bring an interest rate cut of 0.25%, the trade may be more interested in what the Chairman and other members have to say about prospects for additional cuts in 2025. The EU’s latest sanctions on Russia’s shadow fleet of oil tankers could disrupt their exports to Asia and lead to a tightening of available supply.
NATURAL GAS
A warmer than normal weather pattern for the US continues to weigh on natural gas prices. The medium range forecasts show warmer than normal conditions dominating the lower 48 states, which will lower demand and limit weekly supply draws. The 6-10 day has some below normal temperatures along the east coast and into Appalachia but above normal temperatures cover the western two-thirds of the nation. The 8-14-day has above normal temperatures across the entire nation, except for the southern tip of Florida, which his expected to see near-normal conditions. Ukraine’s Prime Minister said that Ukraine was willing to work out a deal to enable gas to transit through its territory to western Europe, but he ruled out any extension of the existing deal with Russia. He said they would accept any origin but Russia. Time is running out; the current deal transit deal with Russia expires on January 1. EU nations are reportedly looking for alternate supplies. Some countries are considering getting gas from Azerbaijan, which could transit through Ukraine, but there is no deal yet. The loss of Russian gas supply to Europe could improve demand for US LNG.
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