Iran Tensions Keep Oil on Edge

CRUDE OIL

January Crude Oil was slightly higher early Wednesday as hopes of a negotiated agreement with Iran faded. Iran’s security chief said Tehran would not allow even a single particle of enriched nuclear material to leave the country. Despite indications from President Trump that the US will not launch a massive airstrike against Iran, attacks on shipping in the Strait of Hormuz continue. Mideast producers have been successful at boosting shipments in despite the blockages, but not without added costs for shipping and insurance. This keeps end user prices elevated. This situation remains volatile, and there is also a chance that Trump’s pause is only temporary. Reuters, citing unnamed sources, said API crude stocks were up 9 million barrels in the week ending November 6 versus an average expectation from the Reuters poll calling for a decline of 1.1 million. Gasoline stocks were +4,000 barrels versus -100,000 expected, and distillates were +1.5 million versus -1.0 million expected. For today’s EIA, in additions to the expectations shown hear. refinery runs are expected to be +0.4% to 94.9%.

PRODUCTS

Product prices were higher early Wednesday as the market weight the news of strong Mideast exports against what appears to be no progress in negotiations between the US and Iran over ending the conflict Reuters reported on Tuesday that shipping data showed that the ship transporting the first cargo of diesel from Russia had come to a halt off the east coast. New Jersey’s Governor this month warned local port officials and terminal operators against accepting fuel, saying those shipments would break federal law.

NATURAL GAS

January Natural Gas extended its rally to a fourth straight session early Wednesday, as a drop in US output and a forecast for cooler weather in parts of the US this weekend offered some support. LSEG said average gas output in the US Lower 48 states is running around 112.2 billion cubic feet per day (bcfd) so far in November, down from 113.4 bcfd in October. They were also projecting daily output at 109.7 bcfd on Tuesday. LSEG also said average gas demand in the Lower 48 states, including exports, would rise from 113.4 bcfd this week to 122.0 bcfd next week as the cooler weather sets in. A cold blast is expected this weekend form the upper Midwest down into the Carolinas, and this could provide a boost to heating demand for a change. However, the 6-10 and 8-14 day maps still show above normal temperatures predominant over the central and eastern US. LSEG data also shows LNG flows picking ups, with average gas flows to the nine major US export plants reaching to 19.0 bcfd so far in November, up from 18.4 bcfd in October and the record 18.8 bcfd in April.

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