Written Commentary
Wkly Futures Market Summary For 2.10.2025
February 10, 2025
CRUDE OIL
October Crude Oil traded to its highest level since August 1 overnight, as the market continued to draw support from an improvement in the US economic picture and concerns over potential escalation in the Mideast conflict. Three Fed policymakers said on Friday that they were more confident that inflation was cooling enough to support a cut in rates in September. The trade will be looking to US PPI tomorrow and CPI on Wednesday and their implications to see if that trend continues. Unemployment claims fell more than expected last week, which eased concerns about a recession and crude oil demand. The trade is wondering when and how Iran will retaliate for the recent killing of a Hamas leader in Tehran. US oil rigs in operation increased by 3 last week to 485. This was down from 525 a year ago. China CPI rose 0.5% in July versus expectations for a 0.3% increase and a decline of 0.2% in June. This adds a bit of optimism regarding global demand. However, trade sources say Saudi crude exports to China are expected for fall to 43 million barrels in September, down from 46 million in August. Today, OPEC cut its forecast for 2024 global demand growth to 2.11 million barrels per day from 2.25 million forecast last month, citing slower than expected demand during the first half of the year and reduced expectations for China. This growth rate still above forecasts by IEA and others. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 23,657 contracts of crude oil for the week ending August 6, reducing their net long to 188,260. This was their smallest net long since June 18, but it was towards the middle of the historic range.
PRODUCT MARKETS
Friday’s Commitments of Traders Report showed managed money traders were net sellers of 5,446 contracts of RBOB for the week ending August 6, reducing their net long to 7,624. This was their smallest net long since July 2017 and down from 79,525 this past April. October RBOB is drawing support from the general trend in the energy markets, with an improvement in the US economic outlook late last week.
NATURAL GAS
Dutch gas prices were higher overnight over concerns about Russian deliveries through Ukraine after video posted on Friday showed Ukrainian soldiers in control of a gas measuring facility in Sudzha, Russia, which is just over the border from Ukraine and has been the focus of intense battles recently. Europe has been weaning off Russian gas supply since the start of the war and has been replacing it with LNG (from the US). US natural gas rigs in operation fell by 1 last week to 97. This was down from 123 a year ago. US supplies are still well ahead of a year ago and the five-year average, but the surpluses have gotten steadily smaller over the past several weeks. The weather forecast call for above normal temperatures across the middle of the US lower-48 next week, but the extreme heat looks limited to Texas and surrounding states, and the west coast and middle Atlantic look near or below normal. In other words, no widespread, extreme heat expected. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 1,750 contracts for the week ending August 6, reducing their net short to 51,787. This is a relatively modest net short compared to the record of short of 315,000 from March 2020 and 104,000 short as recently as April.
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