Feb Crude Oil Slightly Lower

CRUDE OIL 

February Crude Oil is slightly lower this morning but is inside Friday’s range. The US Congress passing a spending bill and avoiding a government shutdown late Friday may have eased concerns about demand, but the dollar was in back in positive territory overnight after a reversal lower on Friday, and that may have limited the gains. The Druzhba pipeline, which sends Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic and Germany, has restarted after halting on Thursday due to technical problems. The Baker Hughes rig count showed US oil rigs in operation were up 1 rig to 483 last week. This was down from 498 rigs a year ago and below the five-year average of 510. Despite the lower count, US production is at all-time highs. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 57,215 contracts of crude oil for the week ending December 17, increasing their net long to 161,201. This is at the lower end of the historic range, so the market is far from overbought. A report from Sinopec report last week said China’s crude oil imports could peak in 2025 and that the country’s oil consumption would peak as soon as 2027 as gasoline and diesel consumption weakens.

 

Oil refinery

 

NATURAL GAS

Natural Gas extended last week’s rally overnight but is back near unchanged this morning. The Baker Hughes rig count showed US natural gas rigs in operation were down 1 rig to 102 last week. This was down from 120 rigs a year ago and below the five-year average of 117. The transit deal for delivering Russian natural gas to eastern European nations via a Ukraine pipeline will expire on December 31. Russian President Putin met with Slovak Prime Minister Robert Fico on Sunday to discuss a solution, but the only report out of it was that the situation is “complicated.” Ukraine has ruled out an extension od the deal, but President Zelenskiy said it might be possible to extend the deal if Russia was not paid for the gas until after the war is over, does not sound very promising. However, only about 8% of peak Russian gas flows to Europe went through Ukraine in before the war. Since the war begam Russia has since lost market share to Norway, the US and Qatar. Any reduction in supply from Russia to Europe should boost demand for US LNG. The 6-10 day forecast has much above normal temperatures around the Great Lakes and northern Midwest, with above normal across the lower 49. Conditions turn more moderate in the 8-14 day, with less extreme warmth overall and near normal conditions emerging the northwestern and southeastern US, but it is still warmer than normal. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 13,306 contracts of natural gas for the week ending December 17, reducing their net short to 66,250.

 

PRODUCT MARKETS

Friday’s Commitments of Traders Report showed managed money traders were net sellers of 5,933 contracts of RBOB for the week ending December 17, reducing their net long to 67,104. The peak long for 2024 was 79,525, and the record net long is 101,476. For ULSD, managed money traders were net buyers of 14,689 contracts, reducing their net short to 32,134, which is up from a record net short of 46,823 the previous week.

 

 

 

 

 

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