Written Commentary
CRUDE OIL
January Crude Oil is lower this morning, falling to its lowest level since November 18, as the market was clearly not surprised by the agreement announced yesterday that OPEC+ would postpone their production increases by three months, until April of next year. The US payrolls report this morning leaves the possibility of a rate cut at the Fed their meeting later this month, which could lend some support to crude. The cease fire in the Mideast appears to be holding, which eases concerns about supply interruptions. Chinese demand is still a concern.
NATURAL GAS
January Natural Gas saw a brief recovery rally yesterday, but it is lower this morning and is threatening to take out Wednesday’s three week low. Yesterday’s weekly EIA Gas storage report showed a net draw of 30 billion cubic feet for the week ending November 29, to 3,937 bcf. This was towards the bullish end of expectations calling for -53 to +59. The five-year average change for the week is -43 bcf. Storage was +5.9% from a year ago and +7.7% from the five-year average, which was up from +3.4% and +7.3% the previous week. The US is expected to see a warmup this weekend that could extend over the next couple of weeks. The 6-10-day forecast has above normal temperatures in the western half of the lower 48, and mostly normal in the east, with the exception of some cooler than normal temps for the southeast. The 8-14 day has warmer than normal across the eastern three quarters of the nation and near normal elsewhere. This could keep US supply at a surplus to year ago.
PRODUCT MARKETS
January RBOB and ULSD are also lower today, as the negative sentiment pervades the petroleum sector, despite relatively tight US supply.
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