Written Commentary
NATURAL GAS
Natural gas prices have been able to follow through on last week’s key reversal and could be on track for a fourth positive day in a row. The 6-to-10 and 8-to-14-day forecasts are showing below normal to well below normal temperatures across large portions of the US, which should boost demand. There are reports that the Freeport LNG export terminal continues to ramp up operations, and that should provide a boost to US export demand. Friday’s The Baker Hughes report showed US gas rigs unchanged from the previous week, but they are just two rigs away from reaching a 9-month low. Near-term demand is on the rise, which could help underpin prices early this week. With the market within striking distance of a positive monthly key reversal, natural gas could benefit from end-of-month short-covering.
CRUDE OIL
Lukewarm domestic demand continues to weigh on crude oil prices, as are ongoing concerns with the status of China’s economy. Over the weekend, Russia cut the flow of crude oil from the Druzhba pipeline, which provides oil to Poland. They will reduce their March crude oil exports from their western ports by 25% from their February levels. Friday’s Baker Hughes US oil rig count showed a decline of 7 rigs last week to 600. This was only 1 rig above the 5-month low from February 3. US crude oil production reached a 2 1/2-year high at the start of February, and it held at that level in the past two weekly EIA readings, and there have been no outflows from the Strategic Petroleum Reserve. US crude oil stocks have risen 58.4 million barrels since the end of 2022 (up 13.8%). Canadian oil rigs fell by 5 to 158 last week, but the previous week’s total, 168, was their highest in three years. There are reports that more than 1 million barrels per day of Asian refining capacity will be shut down for maintenance during the second quarter.
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