Written Commentary
CRUDE OIL
January Crude Oil was higher early Thursday but inside Wednesday’s range. News that Ukraine hit the Druzhba oil pipeline in Russia’s central Tambov region, the fifth attack on the pipeline that sends Russian oil to Hungary and Slovakia provided some support, but the pipeline operator and Hungary’s oil and gas company later said supplies were moving through the pipeline as normal, according to Reuters. Kpler said that the Ukrainian drone strikes have pushed Russian refining throughput down to around 5 million barrels per day between September and November, a decline of 335,000 barrels per day from the same period last year. They said gasoline was hit hardest the hardest. There is also the perception that the peace talks between Russia and Ukraine have stalled after US envoys met with Putin this week and produced no breakthrough. On the other hand, the possibility of a glut in supply next year with the increases in OPEC+ production limit gains.
PRODUCTS
Product prices are under pressure this week relative to crude oil, particularly diesel. Yesterday’s EIA report showed US gasoline stocks were +4.5 million barrels last week versus expectations for +1.5 million expected and distillate stocks +2.1 million barrels vs +0.7 million expected. Kpler said that the Ukrainian drone strikes have hit Russian gasoline output more than diesel, which may have suggested that the rally in ULSD earlier this season was an overreaction.
NATURAL GAS
January Natural Gas inched above Wednesday’s high early Thursday to reach its highest level since June 27 but fell back to lower on the day as the session progressed. Wintry weather gripping the US has natural gas demand running strong. The 6–10-day forecast shows below and much below normal temperatures from the Midwest to the east coast, with the coldest in New England. The 8-14 day has some moderation, but much of the Midwest, Great Lakes, Appalachia, and the eastern US down into Georgia are expected to remain below normal out to December 16. Much above normal temperatures in the west could boost some out of season cooling demand.
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