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- Risky Business. The Energy Report 01/22/19
Oil is being hit with many contradictions but is lower this morning on slowing economic growth fears. Oil, which was having its best start to [...]
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Futures Market News and Commentary
Feb Nymex natural gas (NGG19) on Tuesday closed down sharply by -4.42 (-12.69%). Nat-gas prices slid to a 1-week low Tuesday after NOAA said the chances for below-normal temperatures for the next 8 to 14 days in the central and eastern U.S. have diminished from earlier forecasts. Also, Radiant Solutions has forecast "significant warmer changes" across much of the U.S. from Feb 1-5. Feb nat-gas last Tuesday rallied to a 3-week high on concern about colder weather after NOAA projected below-normal temperatures for the following 8 to 14 days for the central U.S. and Radiant Solutions forecasted below-normal temperatures for Jan 24-28. A supportive factor for nat-gas prices is reduced U.S. nat-gas output after Tuesday's data showed that lower-48 state nat-gas production fell for a sixth day to a 3-1/4 month low of 83.240 bcf. U.S. nat-gas inventories remain tight at -2.0% y/y at 2.533 bcf as of Jan 11, which is -11.4% below the 5-year average.
Mar WTI crude oil (CLG19) on Tuesday closed down -$1.03 (-1.91%) per barrel and Mar Brent crude (CBH19) closed down -$1.20 (-1.91%). Mar RBOB gasoline (RBG19) closed down -5.00 cents per gallon (-3.41%). Crude prices fell back from a 1-1/2 month high in overnight trade and closed lower after global equity markets sold off, which reduces confidence in the economic outlook and energy demand. Concern about global economic growth is another negative for energy prices after the IMF on Monday downgraded its world growth estimate for the second time in three months as it cut its global 2019 GDP estimate to 3.5% from an Oct estimate of 3.7%, the slowest pace in three years. Worries about a slowdown in China, the world's second-biggest crude consumer, is another bearish factor for energy prices after China Q4 GDP slowed to a 6.4% y/y pace, the weakest pace of growth since 2009. Finally, a plunge in the crack spread to a 1-3/4 year low was negative for the energy complex since that reduces incentive for refiners to purchase crude oil to refine it into gasoline. On the positive side, OPEC Secretary-General Barkindo said OPEC+ members are starting to make "sharp reductions" to implement their supply accord and the market "has started to respond positively." Crude oil prices posted a 1-1/2 month high in overnight trade on optimism the U.S.-China trade war may soon be settled and on positive carry-over from last Friday's Baker Hughes report that active U.S. oil rigs the week ended Jan 18 fell by -21 rigs to an 8-month low of 852 rigs.