Written Commentary
CRUDE OIL
May Crude Oil extended last weeks’ gains overnight as the market continued to correct its selloff from the January highs. It could be drawing support today on reports of another Ukrainian drone attack on Russian oil infrastructure overnight, with the Russian military claiming that Ukraine attempted an attack on the Kropotkinskaya pumping station on the CPC pipeline in Russia’s Krasnodar region. US and Russian officials began talks in Saudi Arabia today that are expected to focus on a Black Sea maritime ceasefire deal. OPEC+ last week released a schedule with lower output quotas in order to compensate for overproduction on the part of some members. Kazakhstan’s oil output has reached a record high in March. Chinese refining company Sinopec will prioritize ‘risk control’ in purchasing Russian oil. Iraq plans to raise oil production capacity to more than 6 million barrels per day (bpd) by 2029, the state news agency reported Iraq’s oil ministry as saying on Sunday. The Baker Hughes rig count showed US oil rigs in operation were down 1 rig to 486 last week. This was down from 509 a year ago and below the five-year average of 524. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 19,250 contracts of crude oil for the week ending March 18, reducing their net long to 96,513.
NATURAL GAS
overnight, with a generally mild weather forecast limiting the potential for US heating demand. The 6-10 and 8-14 day forecast showed mostly above normal temperatures across the lower 48. LSEG said its temperature modelling came in up to 1 degree higher on Monday morning compared to last Friday. The Baker Hughes rig count showed US natural gas rigs in operation were up 2 rigs to 102 last week. This was down from 112 rigs a year ago and below the five-year average of 122. European gas prices were lower as well, as temperatures remained mild. The Kremlin said on Monday that a Russian moratorium on striking energy infrastructure in Ukraine remained in place despite reports of continued Ukrainian attacks on Russian energy infrastructure targets. Financial firm LSEG said average gas output in the lower 48 US states rose to 105.9 billion cubic feet per day (bcfd) so far in March, up from a record 105.1 bcfd in February. LSEG forecast average gas demand, including exports, will rise from 106.8 bcfd this week to 108.0 bcfd next week before sliding to 106.1 bcfd in two weeks. The amount of gas flowing to the eight big operating US LNG plants rose to an average of 15.7 bcfd so far in March, up from a record 15.6 bcfd in February.
PRODUCT MARKETS
Friday’s Commitments of Traders Report showed managed money traders were net buyers of 23,149 contracts of RBOB for the week ending March 18, increasing their net long to 29,183. This is near the low end of the historic range. For ULSD, managed money traders were net sellers of 15,707 contracts, which took them from a net long position to a net short of 12,481.
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