Written Commentary
CRUDE OIL
March Crude oil is trading in the bottom half of Tuesday’s range as the market is in a generally bearish posture on the prospects of increased US production under new policies. The easing of tensions in the Middle East in the wake of the peace deal in in Gaza also pulls support. Trump has said he would add new tariffs to his sanctions threat against Russia if the country does not make a deal to end the war in Ukraine, but if there is an agreement, it would bring an end to sanctions, which would allow Russian oil to return to the global market. The Weekly API report showed US crude stocks +958,000 barrels last week versus expectations calling for -1.6 million. Gasoline stocks were +3.23 million versus +2.3 million expected, and distillates were +1.88 million versus +300,000 expected. Refinery runs are expected to be -0.8% to 90.9%. The EIA report will be released this morning. As of last week, US crude stocks were the lowest for this point in the season in at least six years. Gasoline stocks in Europe have reportedly hit a record high, as exports dropped due to higher output in the US and Nigeria. India’s crude oil imports reached 19.99 million metric tons in December, up 1.6% from December 2023 and its highest level in six months.
NATURAL GAS
March Natural Gas has managed to claw back 50% of its selloff from last week’s high to yesterday’s low. Warmer weather is coming to the US, but the extreme cold this week is helping to tighten US supply, which has been in surplus for almost a year. For the EIA storage report, the Reuters poll calls for US storage to be -225 bcf to -300 bcf last week. The five year average for this week is -182 bcf (range -86 to -326). Last week’s report showed US storage had fallen below year ago levels for the first time since last January. The 6-10 and 8-14 day forecasts show a milder trend, with below normal temps concentrated over New England and the far west and above normal and normal temps in the central part of the country. Russia’s Gazprom is seeking to raise regulated prices at home to fund investment. The company incurred losses of almost $7 billion in 2023, its first annual loss in more than 20 years, due to lower sales to Europe. They are focused on expanding business to China and Iran. Last week Putin announced the company plans to supply Iran with up to 55 billion cubic meters of gas per year. President Trump lifted the suspension of new LNG export facility permits, which is bullish for natural gas.
The trade will be watching the EIA report closely today as it its anticipating a sharp decline.
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