Crude Oil Higher Following Steep Selloff

CRUDE OIL 

March Crude Oil was higher overnight following a steep selloff yesterday to the lowest level since January 9. So far, the market has stayed inside yesterday’s wide range. Energy prices were sharply lower yesterday on a steep selloff in the stock market. Saudi Arabia’s oil minister and several of his OPEC+ counterparts have held talks following President Trump’s call for lower oil prices, including representatives from Libya, Iraq, and UAE. A formal meeting of OPEC+ producers is scheduled for next week. There has been no official response from Saudi Arabia or OPEC+ since Trump’s statements, but OPEC+ does have an official plan in place to start increasing production in April. Previous plans to do so last fall were postponed due to low prices. OPEC+ producers are currently holding back around 5.86 million barrels per day. Protesters blocked crude oil loading at two Libyan ports yesterday, demanding the relocation of several oil company headquarters from the coastal regain to the “Oil Crescent” region and are calling for the coastal region to be developed to improve living conditions. Libyan production is estimated at 1.4 million bpd, 200,000 bpd shy of its pre-civil war high. The two ports under protest are expected to ship around 450,000 bpd in January. Yesterday, China’s official manufacturing PMI for January came in at 49.1, down from 50.1 in December and below the 50-point mark between growth and contraction. This adds to concern about the health of China’s economy and their crude oil demand.

 

OIl derrick as sunset

 

NATURAL GAS

March Natural Gas extended yesterday’s selloff overnight and traded to its lowest level since January 10. Unlike crude oil and the products, it has yet to see a bounce off yesterday’s lows. The 6-10 and 8-14 day forecasts show a mix of colder than normal and warmer than normal temperatures across the lower 48, with the much below temperature limited to the northwest and the northern Rockies near the Canadian border. This suggests the window for steep weekly draws in US gas storage is closing. For the US storage report later this week, a Reuters poll calls for US gas storage to be down 312 to 332 billion cubic feet last week. The five year average draw for this week is 182 bcf, and last year storage fell 326 for the week. Last week 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. Global LNG trade is having an active month. The commodity analysis firm Kpler is forecasting global LNG imports at 38.12 million metric tons for January, up from 37.69 million in December. This would be highest since last January when they totaled 38.73 million and the third highest on record. Imports into Europe are forecast at 11.82 million tons, up from 10.87 million in December, the highest since April 2023, and the fourth highest on record. However, Asian imports are expected to decline to 24.48 million tons, down from a 10-month high of 25.50 million in December, due to a mild winter there.

 

PRODUCT MARKETS

March ULSD fell right to the 200-day moving average yesterday and bounced off that level. Early polls suggests traders are looking for a healthy decline in distillate stocks in this week’s supply report in the wake of the extreme cold in the US last week.

 

 

 

 

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