Written Commentary
CRUDE OIL
January Crude Oil is near unchanged this morning and inside the range of the past week, as the market is drawing support from reports that Iran seized a tanker in the Strait of Hormuz over the weekend, marking their first aggressive move to interrupt oil supply since June. The Baker Hughes rig count showed US oil rigs in operation were up 3 rigs to 417 last week, but this was still down from 478 rigs a year ago and below the five-year average of 460, and it was the lowest for this point in the season since 2020. Russia’s Novorossiysk port resumed oil loadings on Sunday after a two-day suspension that was triggered by a Ukrainian missile and drone attack. The US sanctions on Russian crude oil have left a lot of oil in floating storage, a so far it appears that China and India have avoided buying Russian oil since the sanctions were enacted. This creates an overhang in supply that may or may not hit the market.
PRODUCTS
Product prices are lower this morning but inside Friday’s range. A warmer weather forecast has eased heating needs following a brief cold spell last week. The resumption of air traffic will lift jet fuel demand, but it may also mean a slightly lowed gasoline demand expectation now that it looks like Thanksgiving travelers will not have to seek alternative modes, such as driving.
NATURAL GAS
January Natural Gas is lower this morning but inside Friday’s range. The market saw a steep selloff on Friday after the EIA weekly gas storage report showed a much larger injection than expected, and the gradual warmup through after a cold start to last week lowered the expectations for heating demand. The Baker Hughes rig count showed US natural gas rigs in operation were down 3 rigs to 125 last week, which was up from 101 rigs a year ago and above the five-year average of 109. This was also the highest for this point in the season since 2022.
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