Written Commentary
CRUDE OIL
March Crude Oil was sharply lower early Monday, pressured by a selloff in the commodity sector but also by reduced geopolitical concerns and a recovery in US oil production after being interrupted by the extreme cold the early last week. President Trump said over the weekend that Iran was “seriously talking” with Washington, signaling a de-escalation in his threats to attack Iran. Reports that the naval forces of Iran’s Revolutionary Guards have no plans for live-fire exercises in the Strait of Hormuz were also greeted with relief. The dollar’s sharp bounce off last week’s four-year lows adds to the pressure. OPEC+ agreed to keep its oil output unchanged for March at their meeting on Sunday. US crude oil stocks are above year ago but below the five-year average.
PRODUCTS
Product prices were lower early Monday in concert with the decline in crude oil. The decline in RBOB is a bit more dramatic than the decline in ULSD, perhaps because the severe cold in the southeast and the snowstorm in the Carolinas over the weekend added to heating demand. The Russian government said over the weekend that it was lifting the ban on gasoline exports for oil producers, but it extended the ban on exports for non-producers until the end of July 2026. They also extended the ban on diesel and other types of fuel for non-producers until the end of July.
NATURAL GAS
March Natural Gas was sharply lower early Monday in a clear rejection of Friday’s move to a seven-month high. The extreme cold that lifted the market last week is on its way out. The 6-10 and 8-14-day forecasts have the area of below normal temperatures shrinking eastward, out of the Midwest and the western Great Lakes (as well as most of the southern US). Colder temps will remain in the east, but at less extreme levels. Above-normal temps are expected to continue in the west and will cover about three quarters of the lower 48. LSEG said on Friday that average gas output in the Lower 48 states had dropped to 106.2 billion cubic feet per day (bcfd) in January from a record 109.7 bcfd in December but that daily output was on track to rise for a fifth day in a row to 105.7 bcfd after collapsing to a two-year low of 92.5 bcfd last Sunday.
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