Written Commentary
CRUDE OIL
March Crude Oil is in the bottom half of yesterday’s range down action this morning, as the market continues to assess President Trump’s energy policy, which includes easing regulations and potential increase in US production. One concern that seems to be taking hold this week is that the market will be oversupplied next year. Higher US production could be met with an attempt by Saudi Arabia to win back market share. OPEC+ currently holding back 5.86 million barrels per day. Saudi Arabia crude oil exports in November jumped to their highest level in eight months, according to data from the Joint Organizations Data Initiative. EIA economists are predicting prices to decline this year and next due to higher global production and slower demand growth. For the petroleum stocks reports this week, the Reuters poll has average trade estimates for crude oil to be -1.2 million barrels for the week ending January 17, with distillates -10,000 barrels and gasoline +2.3 million. Refinery runs are expected to be -0.9% to 90.8%. North Dakota production was estimated to be down 130,000-160,000 barrels per day due to extreme cold weather.
NATURAL GAS
March Natural Gas was slightly higher overnight following a steep selloff over the past couple of sessions. Extreme cold is pulling US supply lower. For the EIA storage report this week, the Reuters poll calls for US storage last week to be -230 bcf to -252 bcf. The five year average is -182 bcf (range -86 to -326). Last year, it was 326 lower for that week. Last week’s report showed US storage had fallen below year ago levels for the first time since last January. LSEG reported that lower 48 production so far in January is 103 bcf per day versus 104.2 in December and the record 104.5 in December 2023. Freeze-offs could be pulling it down further. The preliminary estimate for yesterday was only 100.4 bcfd. The 6-10-day forecast has below normal temperatures in the west and northeastern US, above normal in the northern Midwest and great plains and normal elsewhere. The 8-14 day has a mix of mostly normal and above normal.
PRODUCT MARKETS
ULSD is the most supported of the complex due to the extreme cold in the US, but it is under pressure from weakness in crude oil.
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