Written Commentary
CRUDE OIL
December Crude Oil gave back some of Friday’s gains overnight but held in the upper end of last week’s range. News that US and Chinese officials sketched out a trade deal framework ahead of a planned meeting between President Trump and Chinese President Xi Jinping this week may have eased concerns about global economic growth, which is supportive to demand. Treasury Secretary Bessent spoke optimistically over the weekend about the agreement, but Chinese officials did not confirm. Trump and Xi are expected due to meet on Thursday in South Korea to sign off on the terms. Trump also said he will seek China’s help in US dealings with Moscow. Last week, crude oil rallied in the wake of new sanctions being placed on Russian oil companies, and the question is whether Russia will be able to circumvent the sanction as they have in the past. India appears to cooperating as they negotiate with the US over trade.
NATURAL GAS
January Natural Gas traded in a wide range outside range overnight. A cooler trend in the eastern half of the US has improved expectations for heating demand. This comes on top of a drop in US production this month and a recovery in LNG exports. IEA Executive Director Fatih Birol said that a surge in supply of LNG coming to market this year and next is poised to change the rules of the market and warned that it is turning from a sellers’ market to buyers markets, which is pushing LNG prices down. In the US, LSEG reports that the average amount of gas flowing to the eight big LNG export plants has risen to 16.5 billion cubic feet per day (bcfd) so far this month, which if it hold would mark a new record high for a month, beating the previous record of 16.0 bcfd from April.
PRODUCTS
Like crude oil, December RBOB gave back some of its last week’s gains overnight but held in the upper end of last week’s range, but December ULSD extended last week’s rally to trade to its highest level since June. News of a trade framework the Trump an Xi could sign this week supports demand expectations and perhaps gives some hope for China’s help in enforcing the latest sanctions on Russian oil and perhaps pressure them into negotiating a cease-fire with Ukraine. Cooler than normal temperatures in the forecast for the eastern US boost heating demand for ULSD
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