Written Commentary
CRUDE OIL
January Crude Oil is higher this morning as the market apparently is taking a bullish stance on OPEC+ meeting on Thursday. The trade is expecting the group to extend its output cuts into the first quarter of 2025, once again postponing the gradual unwinding of the cuts. The market may have also been buoyed by an slight improvement in attitudes towards China economy this week after some stronger than expected PMI data over the weekend. However, China’s move towards EVs and natural gas powered trucks is expected to limit their demand over the long term. Saudi Arabia is expected to cut its prices to Asia to the lowest level in four years. The Commitments of Traders Report showed managed money traders were net buyers of 3,472 contracts of crude oil for the week ending November 26, increasing their net long to 111,604. This still hovering around the lows of the past decade or more, indicating a soft position if not underbought.
NATURAL GAS
January Natural Gas reestablished its down-trending action overnight after a brief bounce yesterday. After a trend toward seasonal, even colder than normal weather over the past few weeks, the medium-range forecasts for the lower 48 states have turned milder. The 6-10-day forecast now calls for near normal conditions east of the Mississippi and above normal west, with the above normal extending across almost the entire nation in the 8-14-day. This would lower demand and could keep US supply running at a surplus. The Commitments of Traders Report showed managed money traders were net buyers of 61,574 contracts of natural gas for the week ending November 26, reducing their net short to 61,717. This is not an extreme when compared to the record net short of more than 300,000 from 2020.
PRODUCT MARKETS
The Commitments of Traders Report showed managed money traders were net sellers of 1,192 contracts of RBOB for the week ending November 26, reducing their net long to 67,188. The position is neither overbought nor oversold when compared to the long term range. For ULSD, managed money traders were net sellers of 3,842 contracts, increasing their net short to 27,386.
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