CRUDE OIL
March Crude Oil saw choppy action overnight inside yesterday’s range as well as inside Monday’s big range down. The API report yesterday afternoon was bullish against expectations, with US crude oil stocks +2.86 million barrels for the week ending January 24 versus trade expectations calling for +3.2 million. Gasoline stocks were +1.89 million barrels versus +1.3 million expected. Distillates stocks were -3.75 million versus -2.3 million expected. The weekly EIA Report will be out this morning. Traders are also looking for refinery runs show a decline of 0.9% last week to 85.0%. Libya’s state run National Oil Corp said yesterday that export activity was running normally after it held talks with protestors at two of the nation’s ports, easing concerns about tightening supply. President Trump said yesterday that he still plans to issue 25% tariffs on Canada and Mexico on Saturday. Canada supplied 39 million barrels of oil per day in 2023, roughly half of all the crude oil the US imported that year. Egypt confirmed today the discovery of at least 8 million barrels of oil in a well in the Gulf of Suez. Mexico’s state oil firm Pemex said yesterday that its crude oil production fell to 1.30 million barrels per day in December, the lowest in more than 40 years. The market awaits an OPEC+ minister meeting next week for a response to Trump’s call for lower prices. OPEC+ has a plan in place to start lifting some of its quotas in April.
NATURAL GAS
March Natural Gas is higher this morning after bouncing off the 200-day moving average overnight. The market has been under pressure over the past couple of weeks after trading to six week highs on an extremely cold weather forecast. The cold snap has come and gone, and conditions look mild/normal ahead. For the US storage report tomorrow, the Reuters poll calls for US gas storage to be -304 to -332 billion cubic feet for the week ending January 24, which is substantial and reflects expectations that usage was very heavy during last week’s extreme cold. The five year average draw for this week is 182 bcf, and last year storage fell 326 for the week. Last week’s report showed a smaller than expected draw, which helped contribute to the resumption of the selloff. Worse yet for the bulls, US supply climbed back to a surplus to year ago levels after falling to a deficit for the first time in a year the previous week. Chevron said yesterday that it plans to build natural-gas power plants next to data centers in the US, as AI energy needs are expected to soar. The European Commission did NOT propose a ban on Russian LNG in its latest package of sanctions because member states raised concerns about first securing alternatives, including from the US, this according to EU diplomats and Reuters. President Trump has expressed a desire for Europe to buy more US LNG.
PRODUCT MARKETS
The trade is looking for a drop of 2.3 million barrels, and the API report had them down 3.75 million. The market fell below the 200-day moving average on Monday but only briefly.
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