Written Commentary
CRUDE OIL
January Crude Oil was moderately higher overnight but inside Friday’s range. The market is drawing support from an improvement in China’s economic data over the weekend. On Saturday, China’s National Bureau of Statistics official PMI data rose to a seven-month high at 50.3 from 50.1 in October. Retail sales grew the most since February. Overnight, the Caixin/S&P Global manufacturing PMI to 51.5 in November, up from 50.3 in October and the highest since June. Eyes are on the OPEC+ meeting this week, which is now scheduled for Thursday after being postponed from Sunday. Thee group is reportedly discussing a delay in the output increases that were due to start in January. The first increase was expected to be about 180,000 barrels per day. UAE had negotiated an increase of 300,000 bpd for 2025. OPEC+ is currently holding back about 5.86 million bpd. Saudi Arabia is expected to cut crude prices for Asian buyers in January. The cease-fire in Lebanon is tenuously holding. There were two Israeli strikes in south Lebanon over the weekend, with the Israeli military saying it had attacked a facility that housed rocket launchers. Both side of the conflict have accused the other of violating the terms of the agreement since the cease-fire began on Wednesday.
NATURAL GAS
January Natural Gas was lower overnight following a recovery rally on Friday. US LNG export plants were expected to draw 14.6 billion cubic feet on gas on Friday, the highest for the year and just short of the record 14.7 bcf from last December. The weather forecast shows a moderating trend over the next couple of weeks after some more cold weather moves though the eastern half of the lower 48 this week. The 6-10 day forecast calls for below normal temperatures from Illinois eastward and above-to-much above normal from the great plains westward, while the 8-14-day shows mostly near-normal conditions east and less and not as warm west. The seasonably cold weather as well as the strong LNG offtake could allow for some tightening of US supply. As of last week’s EIA report, US storage was up 3.4% from a year ago and 7.3% above the five-year average. The Baker Hughes rig count showed US natural gas rigs in operation were unchanged at 100 rigs last week, down from 117 rigs a year ago and below the five-year average of 116.
PRODUCT MARKETS
January RBOB is higher this morning after falling to its lowest level since October 29 on Friday and filling a gap from the open on October 30 at 1.8986.
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