Written Commentary
Sentiment Rises in Hopes of Avoidance of Gov’t Shutdown
March 14, 2025
CRUDE OIL
After selling off yesterday, September Crude Oil wad slightly higher overnight off reports that API crude oil stocks fell 4.4 million barrels last week, which was counter to expectations calling for an increase. The EIA will release their weekly report this morning. A Reuters survey shows the trade looking for crude oil supply to be up 1.0 million barrels, with gasoline down 1.7 million and distillates down 0.5 million. Refinery utilization is expected to be steady at 95.4%. Prior to the overnight bounce, crude had declined for three straight days on concerns about Chinese demand after a poor showing for their second quarter GDP and a 3.7% decline in their refinery operations in June. The IMF said yesterday that the global economy is set for modest growth over the next two years amid cooling activity in the US, a bottoming-out in Europe, and stronger consumption and exports for China. The trade has turned more optimistic about a Fed rate cut in September, which is viewed as supportive to oil demand. The Liberia-flagged oil tanker Chios Lion was assessing damage and investigating a potential oil spill after it was attacked by Houthis in the Red Sea. Reports of Houthi attacks this week have not lent much support to the oil markets as the trade has seems to be focusing on demand.
PRODUCT MARKETS
RBOB and ULSD were near unchanged this morning as they await the EIA inventory reports this morning. The trade is looking for a gasoline stocks to be down 1.7 million and distillates 0.5 million. September RBOB fell to the 50% retracement of the May-July rally yesterday, and that could hold the market if the inventory numbers are supportive.
NATURAL GAS
September Natural Gas is consolidating the selloff from Monday. It is possible that the gradual restart of the Freeport LNG facility, though slower than anticipated, could help the gas market establish a low. US power demand hit a record high on Monday, which was the hottest day of the year so far, but weather trends look bearish for the next two weeks. The 6-10-day forecast has below normal to below normal temperatures for the eastern two-thirds of the lower 48, with the west hotter than normal. The 8-14-day shows warmer than normal temps returning to the northern regions and Eastern Seaboard but normal to below normal in the southern Midwest and southern Plains and less extreme heat out west. LSEG said gas output in the lower 48 rose to an average of 102.2 bcfd so far in July, up from 100.2 in June and a 17-month low of 99.5 in May, and they expect average gas demand including exports to fall from 105.1 billion cubic feet per day this week to 103.6 next week. Gas flows to the seven big US LNG export plants have fallen to 11.8 bcfd so far in July, down from 12.8 bcfd in June due to the shutdowns from Hurricane Beryl. For the weekly EIA storage report on Thursday , the trade is looking for an increase of 12-30 bcf last week. As of last week’s report, storage was running 9.7% above a year ago and 18.7% ahead of the five-year average.
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