Gas & Diesel Follow Crude Higher

CRUDE OIL 

January Crude Oil is a bit higher this morning, but it is still confined to the lower half of Friday’s range down. News out of the Mideast has been relatively quiet recently, but the Ukraine/Russia war intensified over the weekend after Russia launched 120 missiles and 90 drones in its largest strike in almost three months, including attacks on energy facilities. Two US officials familiar with the decision said that the Biden administration has allowed Ukraine to send US long range missiles to strike deeper into Russia, which has prompted the Kremlin to accuse the US of escalating the war. One oil analyst noted that so far Russian oil exports have not been affected by the war, but if Ukraine targets more oil infrastructure, the oil market could take notice. Last week the market fell under pressure from among other things economic headwinds from China after it was reported that China’s refiners processed the equivalent of 14.02 million barrels per day in October, down from 14.3 million in September and 15.05 million in October 2023. This was the seventh straight month of year over year declines. Saudi Arabia exported 5.975 million barrels per day in September, up from 5.671 million in August. Production fell to 8.975 mbpd from 8.992 in August.

PRODUCT MARKETS

Gasoline and diesel seem to be willing followers of crude oil higher this morning. The EIA report last week showed gasoline stocks at the lowest they have been for this time of year in at least six years and near the lowest they have been for any time in six years. Distillate stocks were also lower than expected last week, but they were well above year ago levels.

NATURAL GAS

January Natural Gas is holding in positive territory this morning after failing to take out last week’s high overnight.  The weather in the lower 48 is still trending warmer than normal for the most part, but seasonal trends should help pull average gas demand higher over the next two weeks. LSEG estimates that demand including exports will increase from 108.1 bcfd last week to 108.1 this week and 117.7 next week. LSEG said that average gas output in the lower 48 eased to 100.3 billion cubic feet per day so far in November, down from 101.3 bcfd in October. The record was 105.3 bcfd last December. US gas flows to the seven big US LNG export plants were on track to rise from 14.0 billion cubic feet per day last Wednesday to a nine-month high of 140.4 bcfd on Thursday. Russian gas exports through Ukraine to Europe were stable today, according to Gazprom, despite the company cutting off gas supplies to the Austrian energy company OMV. Gazprom halted supplies to OMV on Saturday after OMV threatened to impound some of Gazprom’s gas as compensation for an arbitration it had won over a contractual dispute. Russian gas flows to Europe via Ukraine are relatively small. They shipped about 15 billion cubic meter via through that country in 2023, only about 8% of peak Russian gas flows to Europe in via various routes in 2018-2019. Most countries in Western Europe have looked for alternative sources.

Interested in more futures markets?  Explore our Market Dashboards here.