Written Commentary
CRUDE OIL
March Crude Oil is higher this morning after falling to its lowest level since January 10 yesterday and overnight. Speaking to the World Economic Forum on Thursday, President Trump urged Saudi Arabia and OPEC to bring down oil prices. OPEC+ has yet to respond, but they do have a plan in place to relax production quotas next quarter. They had planned to do so in the third quarter in 2024, but they repeatedly postponed the action because of low prices and disappointing demand from China. Yesterday, the finance chief at Indian refiner Bharat Petroleum told Reuters that middlemen supplying Russian oil are not offering cargoes due to new US sanctions targeting Russian producers, tankers, and insurers. The EIA report yesterday was supportive for USLD. Crude stocks fell a little less than expected, and gasoline stocks increased as expected, but distillate stocks 2.9 million barrels versus expectation for a 300,000 barrel increase. Refinery runs fell much more than expected, as refineries apparently began shutting down ahead of the extreme cold. US crude oil stocks are the lowest for this point in the season in six years and the lowest overall since 2022. Stocks at Cushing, OK are the lowest for this point in the season in six years as well.
NATURAL GAS
Speaking to the World Economic Forum yesterday, President Trump said the US would guarantee supplies of LNG to Europe. This was in response to a question from the TotalEnergies CEO, who asked what he would do if higher exports meant higher prices for US customers. Some US manufacturers that consume large amounts of natural gas have opposed the rapid build-out of LNG facilities. The EIA gas storage report yesterday showed a draw pf 223 bcf for the week ending January 17, which was a smaller draw than expectations calling for -225 to -300. Storage was up 1.3% from a year ago and 2.3% above the five-year average versus -2.1% and +3.5% the previous week, marking a return to a surplus relative to a year ago levels after falling below for the first time in a year the previous week. There had been talk of large draws for the next couple of weeks due to the extreme cold. The 6-10 and 8-14 day forecasts show a mix of normal, above-normal, and below normal temperatures across the lower 48, which seems moderate compared to the extreme cold this week.
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