Written Commentary
CRUDE OIL
January Crude Oil is lower this morning after reaching its highest level since October 27 yesterday. The market is chopping around on ideas of burdensome supply, but it is holding most of its gains that came in the wake of the latest US sanctions on Russian crude producers. And those sanctions appears to be having some affect. Some refiners in China and India have been reported to be looking for alternative supplies. Kpler is estimating Chinal’s November seaborne imports from Russia to drop to around 926,000 barrels per day from 1.45 million in October. Their imports of Saudi crude are expected to increase to 1.78 million bpd from 1.20 million in October. India’s imports of Russian crude are expected to reach 2.26 million bpd, up from 1.70 million bpd in October. India may have committed to the Russian imports before the sanctions were announced, and they may start to decline in December.
PRODUCTS
January RBOB reached its highest level since July 30 yesterday , and January ULSD pushed through its June 23 high to its highest level since October 2023. Both markets have reached short term overbought status, but there is no indication of a top. Product supplies are tightening as sanctions on Russian oil companies Rosneft and Lukoil are forcing them to divest ownership of refineries in eastern Europe. This week there were reports that Bulgaria has one month of gasoline supplies and that a key refinery in Serbia faces an uncertain future.
NATURAL GAS
January Natural gas traded to a new high for the move overnight, as the market draws support from cold weather in the US and a strong pace of US LNG exports. We are moving into the key demand season, and the blast of colder weather early this week was a sharp change from the dominant trend this Autumn. However, the weather is expected to warm up dramatically over the next few days. The 6-10 and 8-14 day forecast still show warmer than normal temps from the Plains to the East Coast out through November 25. The Northeast and the western US could see normal to below normal temps.
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