CRUDE OIL
February Crude Oil is slightly higher this morning but is struggling to break clear of the 100-day moving average after pushing above it overnight. The market has reached its highest level since November 25, and there is some excitement over the possibility of seeing a higher weekly close for the first time three weeks. The market has found support this week from new sanctions against Iran and Russia, additional uncertainty over Mideast supply in the wake of the collapse of the al-Assad regime in Syria, and IEA’s a revision higher in demand expectations for next year. The biggest supportive factor was probably the suggestion by China that they will add monetary policy to their attempts to stimulate there economy, thereby raising hopes for better oil consumption in 2025. However, IEA also expects ample supply in 2025 due to higher production from non-OPEC producers, not to mention the (oft-postponed) scheduled increase in OPEC+ production. Three of Canada’s biggest oil producers, Suncor, Cenovus, and Imperial Oil are projecting increases of 3.1%-4.4% in output for 2025. There was no mention of concerns about possible US tariffs on Canadian imports that could include oil. The price of Iranian crude sold to China has increased as fresh US sanctions have tightened shipping capacity and driven up logistics costs. US crude oil and gasoline stocks are well below year-ago and five-year average levels, and distillates are above a year ago. Crude stocks in Cushing, OK are near the lowest in six years.
NATURAL GAS
February Natural Gas is near unchanged this morning following a sharp rally yesterday in the wake of a bullish EIA storage report. The report showed a draw of 190 bcf from US gas storage last week, which was bigger than expectations calling for draws of 59 to 176 bcf, and it was the biggest weekly draw since last January. This put storage at 3,747 bcf, which is up 2.3% from a year ago and 4.4% above the five-year average versus +5.9% and +7.7% the previous week. The weather in the northern lower 48 is expected to turn milder over the next several days, but medium-range forecasts are a bit cooler than they were yesterday, with an near normal conditions replacing above normal for the eastern half of the US in the 6-10 day outlook and cooler than normal expanding from Florida into Appalachia and the mid-Atlantic in the 8-14 day.
PRODUCT MARKETS
February RBOB is finding support from the crude oil market and from lower than average US gasoline supply. The market pushed above the 100-day moving average yesterday. February ULSD pushed through the 100-day moving average this morning but backed off.
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