CRUDE OIL
March Crude Oil is lower this morning but is inside the upper end of yesterday’s range. The EIA report yesterday was similar to Tuesday’s API report, with a larger than expected draw in crude oil stocks, and this gave a boost to a market that had already seen strong gains off last week’s expansion of US sanctions against Russian oil. Cushing, OK stocks increased slightly after falling last week. Refinery activity fell more than expected, but that did not prevent product stocks from increasing. US crude oil stocks are the lowest since April 2022 and are at their lowest level for this point in the season in at least six years. Indian Oil Corp has issued its first sour crude import tender from the spot market since March 2022. This comes in the wake of the US sanctions against Russian crude. Spot premiums for Middle East crude reached their highest levels in more than two years yesterday on strong demand from India and China. The IEA said this week that the new sanctions cover entities that handled more than one-third of Russian and Iranian crude exports in 2024. President-Elect Trump has expressed a desire to tighten sanctions on Iran as well as boost US production. In his hearing today, Secretary of Interior nominee Doug Burgum is expected to tell US lawmakers that he will vigorously pursue Trump’s goals of maximizing energy production from US public lands and waters, calling it key for national security. OPEC said yesterday it expects global demand to rise by 1.43 million barrels per day in 2026 and 1.45 million it expects for 2025. They also put 2024 growth at 1.50 mbpd versus 1.61 million in their December update. Back in July they were expecting 2024 demand to grow by 2.25 mbpd. BP announced it is reducing more than 5% of its global workforce to reduce costs.
NATURAL GAS
March Natural Gas traded to its highest level since June 13 overnight but is back near unchanged this morning. There are reports that President-Elect Trump plans to make it easier for producers of LNG to seek export permit renewals, starting with an executive order on his first day of office. This would end the pause in approval for new LNG projects issued by President Biden last January. The US is the world’s largest exporter of LNG, and this adds to the bullish outlook for Natural Gas in 2025. It is also not a surprise. The 6-10-day forecast shows cold weather in the most of the US, with extreme cold in the Great Lakes, southern Plains, Appalachia, the Middle Atlantic, and the Southeast. The 8-14 day is less extreme but still normal or colder than normal in most regions, except for warmer than normal in central California and Nevada. For the EIA storage report today, a Reuters poll has expectations for US gas storage to be -275 to – 227 bcf for the week ending January 10. Last year, storage fell 154 bcf for the week, and the five year average decline is 137 bcf.
PRODUCT MARKETS
Like the API report, the EIA update yesterday showed larger than expected increases in US gasoline and distillate stocks last week, but that did not deter the RBOB and ULSD markets from making new highs for the move yesterday. March RBOB traded to its highest level since July 12 overnight, but like crude oil it is backing away from its highs.
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