Written Commentary
CRUDE OIL
March Crude Oil is higher this morning, as the market is putting aside fears of trade wars that may have emerged with the announcement of 25% tariffs on all steel and aluminum imports into the US yesterday. The trade may be less inclined to rush to judgement with each new tariff announcement and may be more inclined to view them as negotiating tactics. The Baker Hughes rig count on Friday showed US oil rigs in operation increased by 1 last week to 480. This was down from 499 rigs a year ago and below the five-year average of 521. President Trump also said on Sunday that the US is making progress with Russia to end the Ukraine war, but he declined to provide details about any communications he had with Russian President Putin. Ships are starting to move through the Red Sea again. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 51,252 contracts of crude oil for the week ending February 4, reducing their net long to 140,540, which is towards the middle of the long term range
NATURAL GAS
March Natural Gas is slightly higher this morning, extending the rally off the late January lows. The 6-10-day forecast shows a colder than normal trend dominating the upper half of the lower 48, with some much below normal temperatures centered in the upper Midwest and New England. The 8-14-day is less extreme but shows below normal temps settling in across the eastern two-thirds of the country. Reuters reported that at least three vessels carrying LNG from Oman and Australia are heading west for delivery, with one sailing through the Red Sea, as high prices in Europe continue to draw more supplies. Asian spot LNG)prices hit a two-month high last week, tracking a rally in European gas prices, despite healthy inventories. The chairman of GAIL India said the company would seek to buy a stake in a US LNG plant or secure long-term US supply after the Trump administration lifted a ban on export permits for new projects. India is the world’s fourth largest LNG importer and aims to raise the share of gas in the country’s energy mix to 15% by 2030 from 6.2% currently. GAIL had to stall its 2023 process to buy a stake of up to 26% in an LNG plant in the United States after President Biden paused approvals for pending and future applications to export LNG from new projects. The Baker Hughes rig count showed US natural gas rigs in operation were up 2 rigs to 100 last week. This was down from 121 rigs a year ago and below the five-year average of 118. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 4,036 contracts of natural gas for the week ending February 4, reducing their net long to 47,914.
PRODUCT MARKETS
Friday’s Commitments of Traders Report showed managed money traders were net buyers of 6,374 contracts of RBOB for the week ending February 4, increasing their net long to 46,774, which is towards the middle of the long-term range. For ULSD, managed money traders were net buyers of 6,332 contracts, which took them from a net short position to a net long of 6,081, is close to a flat position.
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