US Supply Tightening Slows

CRUDE OIL 

May Crude Oil is higher this morning as the market found support around the $65 level earlier this week. The oil market has stabilized in the wake of the Trump administration showing some flexibility on the tariffs against Canada and Mexico. There is also talk that the 10% tariff on Canadian energy imports could be lifted. President Trump on Thursday said Mexico won’t be required to pay tariffs on any goods that fall under the United States-Mexico-Canada Agreement on trade until April 2. Russian forces damaged Ukrainian energy and gas infrastructure overnight in their first major missile attack since the US paused intelligence sharing with Ukraine, but there is no telling how this will affect a possible peace agreement Russia said yesterday that it would seek a peace deal in Ukraine that safeguards its own long-term security and will not retreat from the gains it has made in the conflict. Russia’s Deputy Prime Minister Alexander Novak said today that OPEC+ could reverse this week’s decision to start increasing production if there are market “imbalances.” China’s crude oil imports during January and February equated to roughly 10.38 million barrels per day, down from 10.74 million for the same period in 2024, according to data from the General Administration of Customs. Analysts blamed tougher US sanctions on ships carrying Russian and Iranian oil as rather than lower demand. US Treasury Secretary Scott Bessent said yesterday the US will exert a campaign of maximum pressure of sanctions on Iran to collapse its oil exports and put pressure on its currency. Talks on resuming Iraqi oil flows to Turkey failed on Thursday for the second time in a week.

NATURAL GAS

April Natural Gas gapped lower overnight after reaching two year highs earlier this week. The EIA Gas Storage report yesterday was bearish against expectations, and a less bellicose tone from President Trump over the Canada and Mexico tariffs has eased concern over Canadian supply of natural gas into the US. There has been talk that the 10% tariff on energy imports from Canada could be lifted, but there has been no movement on that issue. The EIA report yesterday showed US gas storage for the week ending February 28 at 1,760 bcf, -80 bcf from the previous week. This was a smaller draw than the average expectation of -97 bcf from a Reuters poll. Storage was down -24.6% from a year ago and -10.4% below the five-year average versus -22.5% and -10.5% the previous week. The weather forecast for the US is looking a little less warm that it was 24 hours ago, with the area of warmer than normal temps in the 8-14 day forecast shrinking to just the eastern half of the lower 48 and the colder than normal temps expanding from the west coast into the Great Plains. European leaders are expected to urge EU authorities and Kyiv to intensify talks to resolve a halt to Russian gas transit through Ukraine.

PRODUCT MARKETS

US gasoline stocks lean burdensome, as they are the highest they have been for this point in the season in five years. US consumption could see a mild bump over the next few weeks on spring break travel. US distillate supplies are at the low end of the six-year range for this point in the season, but the heating season is winding down.

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