March Crude Under Heaving Selling Pressure

CRUDE OIL 

March Crude Oil prices is under heavy selling pressure this morning, as investors are disappointed that China’s stimulus plans did not offer the type of aggressive measures they were hoping for. Chinese CPI and PPI data released over the weekend was also disappointing, with October consumer prices increasing at their slowest pace since in four months and producer prices falling. Reuters reported this morning Saudi Arabia’s crude oil supply to China is set to fall to about 36.5 million barrels in December, down from 37.5 million in November. This would be the second straight month of declines and the lowest since July.  As reported last week, Saudi crude exports to China were down 10.8% to 59.52 million metric tons in the first nine months of the year, according to Chinese customs data. Saudi Aramco last week announced it had cut the official price for Arab light crude by 50 cents. More than 25% of US Gulf of Mexico oil production remained offline on Sunday after shutting in ahead of hurricane/tropical storm Rafael, but workers are returning to platforms with the storm’s dissipation over the weekend. Expectations that US production will rise under the new Trump administration is also pressuring prices. The Baker Hughes rig count showed US oil rigs in operation totaled 479 last week, unchanged from the previous week, down from 494 a year ago, and below the five-year average of 496.

PRODUCT MARKETS  

December RBOB is sharply lower this morning, in line with the action in Crude Oil.

NATURAL GAS  

January Natural Gas gapped higher this morning and traded to its highest level since October 30. The market’s  open above the 9-day moving spurred some technical buying. LSEG reported that Freeport LNG drew record natural gas volumes on several days last week, following completion of an overhaul that increased processing capacity. They drew a record 2.414 billion cubic feet of feedgas on Friday. Weather forecasts continue to show above normal temperature in the eastern half of the lower 48, but cooler than normal conditions are settling in out west. Report of heavy snowfall in Colorado may have also encouraged ideas that seasonal demand will be soon be picking up. The Baker Hughes rig count showed US natural gas rigs in operation were unchanged at 102 rigs last week. This was down from 118 rigs a year ago and below the five-year average of 115.2.

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