Written Commentary
CRUDE OIL
March Crude Oil was mostly steady overnight, trading inside yesterday’s range. The market is waiting to see if President Donald Trump follows through on his threat of 25% tariffs on Canadian and Mexican imports into the US. A member of the administration suggested this week that the tariffs could be avoided if those countries take aggressive moves to block illicit trafficking of fentanyl across our borders. Perhaps Canada or Mexico will reach can some to some sort of agreement with the US to avoid the tariffs. OPEC+ is scheduled to meet on Monday, where they could discuss Trump’s demand that Saudi Arabia “lower prices,” as well as his stated desire to boost US production. The group has a plan in place to lift some of its quotas in the second quarter, a move they have postponed since the middle of 2024 because crude prices were too low.
NATURAL GAS
March Natural Gas extended this month’s selloff overnight and fell to its lowest level since January 3. Yesterday’s EIA report showed gas storage for the week ending January 24 at 2,571 bcf, -321 bcf from the previous week and within trade expectations of -312 to -332. Storage was down -3.3% from a year ago and -2.6% below the five-year average, the firs time this has happened in more than a year. Analysis firm LSEG is forecasting average gas demand in the Lower 48 states (including exports) to fall to 124.7 billion cubic feet per day next week from 136.8 this week. Total gas usage reached 173.3 bcfd on January 20 and 181.2 bcfd on January 21, beating the prior record of 168.4 from January 16, 2024. The amount of gas flowing to the eight big U.S. liquefied natural gas (LNG) export plants have averaged 14.6 billion bcfd so far in January, up from 14.4 bcfd in December. The record is 14.7 bcfd from December 2023. The 6-10-day forecast has below normal temperatures in the northwestern half of the lower 48 and warmer than normal in the southeastern half, with much below normal temps confined to the Pacific Northwest and the northern Rockies, near the Canadian border.
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