Written Commentary
CRUDE OIL
May Crude Oil is slightly lower this morning, possibly on news that the Trump Administration may be softening its tone on Venezuelan supply. The Wall Street Journal reported that the Trump administration is considering a plan to extend Chevron’s license to pump oil in Venezuela, which is a bit bearish. During a meeting with oil producers yesterday, Trump expressed openness to reversing his administration’s recent order that gave the company until early April to wrap up its Venezuela operation. The administration is also weighing a plan to impose tariffs or other financial penalties on countries that buy oil from Venezuela with the intention of making make it harder for China or other countries to establish a base in Venezuela and to fortify Chevron and keep oil flowing to the US. The Weekly EIA report yesterday came in bearish against expectations for crude oil and gasoline but bullish for diesel, and some traders viewed this as positive overall. Crude oil stocks at Cushing, OK fell to the lowest they had been in at least six years. EIA also indicate that Alaska’s annual crude oil production could increase in 2026 for the first time since 2017.
NATURAL GAS
The Reuters poll has expectations for US natural gas storage ranging from a draw of 31 bcf last week to an injection of 3 bcf last week. The five-year average change for the week is -27 bcf. US gas storage is the lowest has been for this time of year since 2023. A brief return of wintry weather to the Great Lakes this week and colder than normal temperatures expected east of the Mississippi over the next 6-10 days and continuing for the Great Lakes and Northeast in the 8-14 day could support some late-season heating demand. Much above normal temps are expected out west. LNG export capacity continues to grow. Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 105.8 billion cubic feet per day (bcfd) so far in March, up from a record 105.1 bcfd in February. They also forecast average gas demand in the Lower 48 (including exports) to rise from 106.7 bcfd this week to 109.8 bcfd next week. The amount of gas flowing to the eight big US LNG export plants rose to an average of 15.7 bcfd so far in March, up from a record 15.6 bcfd in February.
PRODUCT MARKETS
The EIA report yesterday confirmed a significant decline in US distillate stocks last week and smaller than expected decline in gasoline. Distillate stocks are the lowest for this point in the season 2022 and the second lowest in six years. Gasoline stocks are above a year ago and above the five-year average. We are moving past key heating season, but wintery weather is making a brief appearance in the upper Midwest and Great Lakes this week. Also, the 6-10-day forecast showed below normal temperatures dominating east of the Mississippi, and the 8-14 day has it sticking around in the Northeast and Great Lakes, which could keep heating demand elevated and bring further declines in distillate stocks.
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