Written Commentary
CRUDE OIL
The US/Iran talks concluded on Friday without any big announcement, but geopolitical worries eased somewhat on reports that the two sides have agreed to continue to talk. On Friday, President Trump followed through on a previous threat with an executive order imposing a 25% tariff on imports from any country that “directly or indirectly” purchases goods from Iran. Russia may see their oil exports restricted further. The European Commission on Friday proposed a sweeping ban on any services that support Russia’s seaborne crude oil exports, which goes well beyond previous sanctions. Russia exports more than one-third of its oil in Western tankers , – with the help of Western shipping services. The ban would end that practice. India is suspending purchases of Russian crude as it works out a trade deal with the US.
PRODUCTS
March RBOB reached its highest level since June early Monday, while the nearby contract reached its highest level since November. March ULSD was moderately lower and inside the bottom half of Friday’s range. March RBOB is trading at a 42-cent discount to ULSD after falling to a 59-cent discount at the height of the cold weather threats in late January. Friday’s monthly EIA data showed US gasoline demand fell 208,000 bpd to 8.68 million bpd in November, and distillate demand was down 278,000 bpd to 3.80 million bpd.
NATURAL GAS
March Natural Gas gapped lower early Monday, similar to a week ago. Temperatures in the northeastern US remained below normal over the weekend, but they are expected to gradually warm this week, and the 6-10-day and 8-14 day forecasts show above normal temperatures from the Rocky Mountains to the East Coast, with below normal temperatures along in the west. On Friday LSEG projected average gas demand in the Lower 48 states, including exports, would fall from 159.5 bcfd last week to 141.4 bcfd this week and 132.6 bcfd next week.
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