Cold Weather Sticking Around Eastern US

CRUDE OIL 

January Crude Oil is a bit firmer this morning in a mostly sideway pattern with Wednesday. The ceasefire between Israel and Hezbollah appears to be holding, but both side have accused the other of violating the agreement. OPEC+ has delayed its policy meeting to December 5 from the previously scheduled December 1. The trade has been expecting the group to delay the gradual lifting of some of their quotas, after postponing this action several times this year. However, the group may be getting pushback from some producers. Even if they do postpone the planned increases in production, the market could still be facing a glut next year unless China’s economy starts to rebound. The EIA report on Wednesday was mixed, with crude oil stocks for the week ending November 22 coming in lower than expected and distillate and gasoline stocks higher than expected. US implied gasoline demand was slightly higher than the previous week but well above a year ago. The US is expected to see record travel this week. At 428.4 million barrels, US crude oil stocks are well below 449.7 million a year-ago and below the five-year average of 48.7 million. The Baker Hughes rig count showed the number of US oil rigs in operation were unchanged at 477 this week. This was down from 500 a year ago and below the five-year average of 499.2. The trade still wonders what tariffs are in store for next year.

NATURAL GAS

January Natural Gas is higher this morning and is taking back some of its losses from Wednesday. The colder than normal weather looks like it will stick around in the eastern half of the lower 48 for the next two weeks, from the central Midwest to the east coast, but a warmer trend will be in place from the west coast to the plains. On Wednesday, the weekly EIA gas storage report shower for the week ending November 22 came in at 3,967 bcf, -2 bcf from the previous week. This was within trade expectations of -11 to +6 and close to the median expectation of -3.  Storage was up 3.4% from a year ago and 7.3% above the five-year average versus +3.7% and +6.5% the previous week. Storage is the highest it has been at the point in the season in at least six years. The five-year average change for this week is -25. It tends to put in a high for the year around this time. The Baker Hughes rig count showed US natural gas rigs in operation were unchanged at 100 rigs last week. This was down from 117 rigs a year ago and below the five-year average of 116. Federal regulators on Wednesday gave Cheniere Energy permission to introduce natural gas into its Corpus Christie expansion project, acc to Reuters.

PRODUCT MARKETS

The increase in gasoline stocks last week may have caught traders off guard, as traders were expecting strong demand ahead of the “biggest travel weekend in the history of mankind.” Gasoline stocks are coming off six-year lows, coming in at 212.2 million barrels last week versus 218.2 million a  year ago and 219.9 million on average. They are the second lowest in the past six years. Gasoline stocks have a seasonal tendency to increase from now into early February. Distillate stocks at 114.7 million barrels are up from 110.8 million a year ago but below the five-year average of 120.9 million. Distillate stocks have a seasonal tendency to peak in early January.

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