A Dozen Tankers Waiting in Venezuela

CRUDE OIL

February Crude Oil edged higher early Wednesday, reaching its highest level since December 10. The US seizure of a sanctioned oil tanker near Venezuela last week and the pursuit of two more tankers over the weekend has caught the attention of the market, which has seen a 7% rally off eight-month lows over the last seven sessions. There were reports overnight that more than a dozen vessels loaded with oil were in Venezuela and awaiting directions from their owners. The threat of tighter supply as well as increased geopolitical uncertainty sparked by the US actions have countered expectations for burdensome supplies in 2026. Tuesday’ strong US economic data, with GDP up 4.3% annualized rate in the third quarter, suggests the economy is performing better than expected despite the tariffs, and it presents a better demand picture for petroleum products. The Baker Hughes rig count showed US oil rigs in operation totaling 409 as of December 23, up 3 from the previous reading from Friday. Peace between Russia and Ukraine would offer the possibility of increased flows of Russian oil, but there still seems to be quite a distance between the two nations.

PRODUCTS

Reuters reported that the API report Tuesday afternoon showed product stocks coming as expected, with gasoline inventories +1.09 million barrels for the week ending December 19 versus +1.1 million expected and that distillates +685,000 versus +400,000 expected. The EIA will release its update on Monday, December 29.

NATURAL GAS

February Natural Gas extended Tuesday’s sharp rally early Wednesday but backed off from its highs and fell to lower on the day as the session progressed. Much of the US is experiencing warmer than normal conditions as predicted, but the latest 6-10 day forecast has colder than normal weather re-emerging over the eastern half of the US. Some forecasts have the cold extending further westward into the Plains to as far south as Texas. This is due to an arctic air mass that is expected to move down from Canada early next week. However, at this point, this phenomenon is not expected to last very long, with above normal temps returning the week after next. The 8-14 day shows the below normal temps retreating to the east and above normal once again covering most of the nation. LSEG yesterday projected average gas demand in the lower 48 states, including exports, to rise from 127.9 bcfd this week to 136.0 bcfd over the next two weeks.

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