Written Commentary
CRUDE OIL
March Crude Oil is slightly higher this morning but still in close vicinity of this week’s lows. Saudi Aramco, the world’s leading oil exporter, sharply increased crude prices for March shipments to buyers in Asia amid rising demand from China and India, as U.S. sanctions have disrupted Russian supply. They raised prices for buyers in northwest Europe, the Mediterranean, and the US as well. The hike to Asian customers was not unexpected. The EIA report yesterday showed larger than expected increases in US crude oil and gasoline stocks last week and a larger than expected decrease in distillate stocks. Crude stocks at Cushing OK fell last week, which offered a bit of an offset to the bearishness of the national increase. Implied gasoline demand increased last week but was well below year-ago levels. Distillate supplies are seeing a seasonal decrease, but they are also well below year-ago and five-year average levels. Iran’s president has urged OPEC members to unite against possible US sanctions against his nation after President Trump said he would seek to drive their exports to zero. Iran currently exports 1.5 million barrels per day, mostly to China.
NATURAL GAS
March Natural Gas is back up near Monday’s post-tariff-announcement high this morning, as the market has cast aside concerns about China’s retaliation against US LNG. Reports that shipping costs for LNG have “collapsed” to five year lows means a greater ability for the US to deliver around the world and therefore draw more natural gas supply. Newly-built carriers have apparently outpaced shipping demand, and shorter average journey times have increased vessel availability. Dutch and British wholesale gas prices rose this morning with lower temperatures expected for tomorrow and next week. The NWS 6-10-day forecast shows colder than normal temperatures dominating much of the US except for the southeast, but the 8-14-day has less cold and more warmth. For the US storage report this morning, the Reuters poll shows an average expectation for natural gas storage to be -182 to -138 billion cubic feet last week. The average change for the week is -169 bcf. As of last week’s report, US storage was -3.3% from a year ago and -2.6% from the five-year average. World Weather Service raised the possibility of cold weather in the eastern United States late this winter or in early spring.
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