Written Commentary
NATURAL GAS
March Natural Gas was near unchanged early Friday, having spent the overnight hours inside Thursday’s range. The 6-10 and 8-14 day forecasts show below normal temps across the northern half of the lower 48 states out through January 29, which may allow for a more normal drawdown in supply over the next couple of weeks. Thursday’s EIA gas storage report was bearish against expectations, with US storage -71 bcf for the week ending January 9 versus an average expectation for -90 bcf and a range of expectations of -80 to -117. The five-year average change for this week is -167. This puts storage back above a year ago (+2.2%) and 5.3% above the five-year average versus -3.5% and +2.0% the previous week. LSEG said average gas output in the Lower 48 states has fallen to 109.1 billion cubic feet per day (bcfd) so far in January from a record 109.7 bcfd in December. Average gas flows to the eight large U.S. LNG export plants have held at 18.5 bcfd so far in January, the same as December’s record high.
CRUDE OIL
March Crude Oil was higher early Friday but was inside the lower half of Thursday’s range. Even if the immediate threat of a US strike against Iran has receded, the political instability in that country keeps the oil market on edge. Concerns about potential disruption to oil flows through the Strait of Hormuz lifted the market to its highest level since late September earlier this week. This is happening in the face of higher supply expected in 2026 an the increasing availability of Venezuelan supply on the world market. US Energy Secretary Chris Wright said on Thursday that the US is getting a 30% higher price for Venezuelan crude oil than Venezuela was getting got before the US captured Maduro. In December, oil buyers in Asia were demanding deep discounts on Venezuelan crude due to a flood of sanctioned oil from Russia and Iran and to the heightened risk of loading in the South American country. Venezuela’s interim President Delcy Rodriguez said on Thursday she was submitting a proposal to reform the country’s hydrocarbon laws. This will not induce an immediate increase in supply, but it does indicate that she will cooperate with the US. US crude stocks are near the low end of the five-year range, distillates are at the middle, and gasoline stocks are the highest they have been for this time of year in at least five years. US refinery operations remain high for this time of year.
PRODUCTS
The products regained some of Thursday’s losses early Friday, with ULSD gaining on RBOB, perhaps because some key heating demand areas of the US are finally seeing seasonably cold weather.
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