Supply Build Looms

CRUDE OIL

January Crude Oil is slightly higher this morning but inside yesterday’s range. The market is not reacting to strongly to optimism that the US government shutdown could end this week. On Friday Hungary was granted a waiver from sanctions on buying Russian oil and gas after Hungarian President Orban met with President Trump at the White Houses. This was somewhat bearish as it would allow some of the Russian oil to hit the market without sanctions. But that the fact that Trump allowed an exception to the sanctions may make India and China more inclined to resume buying Russian crude oil. There were reports last week that the volume of oil stored onboard ships in Asian waters doubled in recent weeks after Western sanctions encouraged China and India to curtail their loading of Russian and Iranian crude. The Kremlin said today it was “actively preparing” for President Vladimir Putin to visit India before the end of the year; no comment from India.

PRODUCTS

December RBOB is higher this morning but inside Friday’s wide range. News that the government shutdown may end this week may ease economic concerns, but it would also ease flight delays and open the way for Thanksgiving air travel, which may ease driving demand expectations. December ULSD is lower today after a spike higher on Friday to its highest level since October 23 and nearby prices reaching their highest level since July 14.

NATURAL GAS

January Natural Gas traded to its highest level since July 21 overnight with cold temperatures/wintry conditions moving into the central US over the weekend and continuing east during the first part of the week. Temperatures have fallen below average for a change, but conditions are expected to turn mild as we move through the week. The 6-10 and 8-14-day NWS forecasts have above normal temperatures from the Plains to the East Coast with below normal in the Southwest and parts of New England as well. The warmup may allow for a setback in gas prices, but the alternate story is the strong demand for US LNG, which is not expected to ease. LSEG reports that the average amount of gas flowing to the eight big US LNG export plants has risen to 17.4 bcfd so far in November, up from a record 16.6 bcfd in October. Further increases are expected in the coming months as more LNG plants come on line in the SU.

 Interested in more futures markets?  Explore our Market Dashboards here.