Written Commentary
CRUDE OIL
Back to Iran
March Crude Oil was higher early Friday after President Trump said on Thursday that the United States has an “armada” heading toward Iran. He said he hoped he would not have to use it, but he renewed warnings to Tehran against killing protesters or restarting its nuclear program. This reinserted geopolitics into the crude oil market after a bit of calm with the Administration apparently satisfied with the framework of a deal over Greenland. Iran is a major exporter to China, the world’s second-largest oil consumer, so interrupting Iranian supply is bullish factor. In late 2024, China and other Asian nations started looking at other Mideast crude as an alternative to Russian and Iranian supply to avoid sanctions
PRODUCTS
Both products were higher early Friday following a selloff on Thursday and they were back in the vicinity of Wednesday’s highs. The markets saw some pressure from a bearish EIA report on Thursday, but the extreme cold is lending support, especially for diesel, which is used for heating in some areas and electrical generation in others.
NATURAL GAS
March Natural Gas was near unchanged early Friday but inside Thursday’s range up day. The extreme cold this week is expected to boost heating demand and also reduce supply. This morning Chicago area temperatures are -12 (with a -36 wind-chill). The cold weather extends all the way south into Texas and the southeast, and the 6-10 and 8-14-day forecast have below-normal trends from the Great Plains all the way to the east coast. The cold temperatures have traders concerned about supply, as it could cause freeze-offs (moisture near the caps freezes and block gas) on wells that aren’t adequately protected.
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