- Math Problem. The Energy Report 12/14/18
Oil rallied strong yesterday after someone started to do math. Maybe, just maybe with near record demand in the U.S. and China, and OPEC’s 800,000 [...]...
- Day analysis for WTI Crude
We had this blog post good to go last night and again had technical difficulties posting.
- Intraday price analysis for Natural Gas
We wrote portions of this blog post earlier but could not get it out due to technical issues
Futures Market News and Commentary
Jan Nymex natural gas (NGF19) on Friday closed down sharply by -0.297 (-7.20%). Jan nat-gas on Friday plunged to a 1-month low as forecasts for above-normal temperatures in the U.S. prompted fund selling of nat-gas futures. NOAA is forecasting warmer-than-normal temperatures across most of the U.S. from Dec 18-22 with the Midwest seeing extreme seasonal warmth Dec 16-20. Also, the Weather Company predicts above-average temperatures in the central U.S. may stay through Dec 28. Friday's rally in the dollar index to a 1-1/2 year high also undercut most commodity prices. Nat-gas prices were already on the defensive from Thursday's EIA data that showed U.S. nat-gas inventories fell -77 bcf, less than expectations of -80 bcf. However, U.S. nat-gas inventories remain tight at 2.914 bcf as of Dec 7, -19.9% below the 5-year average and -19.6% y/y and the lowest seasonally since 2002. Big Picture Natural Gas Market Factors: Bullish factors include (1) tight U.S. working gas inventories at -19.9% below the 5-year average, (2) strong global natural gas demand due to firm global economic growth and the need to substitute for coal to reduce global CO2 emissions, and (3) significant U.S. LNG export potential. Bearish factors include (1) near-record U.S. natural gas production and forecasts for production growth of +9% in 2018 and +3% in 2019, and (2) China’s 10% retaliatory tariff on U.S. LNG, which substantially reduces the potential for U.S. LNG exports to China, although China as part of the Dec 1 trade US/Chinese ceasefire agreed to start buying U.S. LNG.
Jan WTI crude oil (CLF19) on Friday closed down by -$1.48 per barrel (-2.62%) and Feb Brent crude (CBG19) closed down -$1.17 (-1.90%). Jan RBOB gasoline (RBF19) closed down by -4.39 cents per gallon (-2.97%). The energy complex was under pressure Friday due to strength in the dollar as the dollar index soared to a 1-1/2 year high. Also, economic weakness in China, the world's second-largest crude consumer, raised energy demand concerns after China Nov industrial production rose a less-than-expected +5.4% y/y, the slowest pace in 10 years. On the positive side was positive U.S. economic data after U.S. Nov retail sales rose +0.2%, slightly stronger than expectations of +0.1%. The early-afternoon Baker Hughes data was also supportive since it showed that active U.S. oil rigs in the week ended December 14 fell by -4 rigs to a 1-3/4 month low of 873, although that was still high at only 15 rigs below the recent 3-3/4 year high of 888 rigs posted in the week ended Nov 16.Big Picture Crude Oil Market Factors: Bullish factors include (1) the reinstatement of full U.S. sanctions on Iran as of Nov 5, although the U.S. gave waivers to 8 countries for up to 1.25 mln bpd of Iranian exports, (2) the agreement by OPEC+ on Dec 7 to cut crude oil production by 1.2 million bpd for the first six months of 2019 (800,000 bpd for OPEC members), which should soak up much of the expected 2019 global oil surplus, and (3) the 50% drop in Venezuelan production seen since 2016. Bearish factors include (1) the surge in U.S. oil production to a record high of 11.7 million bpd, (2) the rally in the dollar index to a 1-1/2 year high, and (3) increased U.S. crude exports that add to global supplies after U.S. crude exports in the week ended Nov 30 rose +761,000 bpd to a record 3.203 million bpd.