Eyes on US/Iran Talks

CRUDE OIL

March Crude Oil was near unchanged early Friday after trading in a fairly wide range. Talks between US and Iran representatives this weekend in Oman are on traders’ minds. Any escalation of tensions between the two nations could reignite concerns about a potential interruption to supplies, especially flow of oil out of the Persian Gulf through the Strait of Hormuz,  through which about one-fifth of the world’s oil consumption passes. For the talks, Iran wants to stick to nuclear issues, while the US wants to discuss Iran’s ballistic missiles, human rights abuses, and Iran’s support for proxies in the region. A productive meeting would ease concerns and likely spark a selloff.

PRODUCTS

Product prices performed like crude oil early Friday, trading back and forth as they waited for the outcome of this weekend’s talks between the US and Iran. March Gasoline is in the vicinity of this week’s six-month highs despite US gasoline stocks being the highest in at least six years. March ULSD has already put in a modest correction from last week’s highs, but the passing of the extreme cold weather may leave those highs intact

NATURAL GAS

March Natural Gas was higher early Friday as it worked to reclaim some of its steep losses from Monday. The 6-10 and 8-14-day forecasts call for above normal temperatures across most of the lower 48 states from the Rockies to the East Coast, and this should pull US consumption back to below-normal levels for this time of year. However, the Northeast is expected to see some colder than normal temperatures this weekend, which could keep near term consumption levels elevated. But despite this, LSEG projected average gas demand in the Lower 48 states, including exports, to fall from 159.5 bcfd this week to 140.7 bcfd next week.

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