Written Commentary
CRUDE OIL
January Crude Oil is near unchanged this morning after bouncing off Friday’s low, as the market weighs the prospects of peace in Ukraine. President Trump has given Ukraine until this Thursday to accept the framework that was introduced last week, but Secretary of State Rubio has suggested there could be some flexibility if progress is made. Talks continued today (Monday) and after US and Ukraine issued said in a joint statement on Sunday that they had drafted a “refined peace framework” after a first day of talks. EU countries have set forth a counter proposal that is more favorable to Ukraine. In the meantime the war continues, with Ukraine’s second-largest city Kharkiv being hit by a drone attack on Sunday and Ukraine hitting a heat and power station in the Moscow region. China is importing unusually large quantities of crude oil from Indonesia, which is believed to be sanctioned Iranian crude trans-shipped in waters off Malaysia.
PRODUCTS
January ULSD extended last week’s selloff overnight to fall to its lowest level since October 29. Peace in Ukraine would ease tight supplies in refined products, especially diesel, as Ukraine’s attacks on Russian refineries have severely damaged Russian supply both internally and for exports, and the latest round of sanctions will also limit supplies to Europe.
NATURAL GAS
January Natural Gas was lower overnight to its lowest level since last Tuesday as the weather forecast for the US has moderated a bit from the worst fears last week. The 6-10 day forecast shows much below normal temps are expected for the northern Plains and northern Rockies, with below normal temps expected over much of the central lower 48 states out through December 7. However, the normal and above normal temps are expected in the middle Atlantic, Appalachia, the Southeastern Midwest and the south from Texas eastward. This may not be the extreme cold that the words “Polar Vortex” were conjuring up in people’s minds.
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