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Natural Gas Holds Its Ground


Natural gas is having trouble sustaining upside momentum, but it has managed to hold its ground above last week’s low in the face of bearish supply news. January natural gas continued its coiling pattern on Tuesday and finished with a moderate gain, but it was under mild pressure overnight. Much of the US is experiencing unseasonably cold weather, which has strengthened demand for natural gas. There are indications that the Freeport LNG export terminal may not restart its operations until early 2023. The closure will continue to limit US LNG exports and result in a larger than normal storage buildup. A Reuters survey has a median expectation for a net injection of 64 bcf in Thursday’s weekly US storage report. Last week’s report showed a net injection of 79 bcf, and a year ago 23 bcf were injected. With the unseasonably cool weather, natural gas prices could remain well supported today. Look for support in January natural gas at $6.210, with resistance at $6.580.

gas stove


While the petroleum markets continue to deal with an uncertain demand outlook, there has been a boost in supply anxiety that has helped the brakes on this week’s pullback. But to sustain a recovery move, the market will likely need bullish data from today’s EIA supply report. A report of a drone attack on a tanker in the Gulf of Oman has increased supply tensions. This has come as US and European officials are dialing back tensions after a missile landed in Poland and killed two people yesterday. Chinese industrial production and retail sales came in weaker than expected, which reinforced the demand concerns that have weighed on prices. The EIA said that US Permian Basin oil production should reach a record level in December, but they also stated that production has grown very slowly. The IEA said that the European Union’s ban on Russian seaborne oil exports and the G7’s price cap on Russian oil sales will create unprecedented uncertainty for the oil markets. After the close yesterday, the API report showed US crude oil stocks declined 5.835 million barrels last week, which was a much bigger draw than expected. Today’s EIA supply report could show a new 2 1/2 year high in US crude oil production if there is an increase from last week’s 12.1 million barrel per day reading.


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