Written Commentary
Wkly Futures Market Summary For 2.10.2025
February 10, 2025
CRUDE OIL
December Crude Oil was moderately higher overnight as it attempted to recover its losses from earlier this week. Disappointing Chinese demand is balanced against concerns about an escalation of hostilities in the Mideast. The trade has been particularly worried about a potential attack by Israel against Iranian oil infrastructure, and that likelihood was lessened this week when Hezbollah appeared to open the door for peace talks. Yesterday’s EIA report showed US crude oil stocks increased by 5.8 million barrels last week, which was considerably higher than the expected increase of 2 million barrels but not as big as the 11 million indicated in the API report. US crude oil production increased by 100,000 barrels per day to 13.4 million bpd, a new record. Cushing, OK stocks increased for the second straight week. Gasoline and distillate stocks fell much more than expected. As one analyst pointed out, implied gasoline demand had its biggest one-week jump since February 2001. Nearly a quarter of fuel pumps in Florida were out of gasoline on Wednesday morning as residents rushed to evacuate ahead of the hurricane. Most of the Florida’s fuel import and storage terminals are located in Tampa Bay. Oil companies shut down terminals to protect against damage. North Dakota oil production was estimated to be down 70,000-100,000 bpd as of Wednesday morning due to wildfires. ND is third-largest oil producing state in the US. The trade will also be focusing on the Chinese finance minister’s press conference on Saturday for details of the fiscal stimulus plan, with expectations for 2-3 trillion yuan in stimulus.
PRODUCT MARKETS
US supplies of RBOB and ULSD both fell more than expected last week, with gasoline falling to its lowest level in over a year. Implied demand saw a sharp increase, but this was likely spurred by the Hurricane Helene, which caused an increase in automobile travel due to evacuations.
NATURAL GAS
Natural Gas prices have been under pressure this week on expectations that Hurricane Milton would knock out power in Florida and reduce gas consumption for electricity generation. As of yesterday afternoon, Milton had already caused 48,000 homes and businesses in Florida to lose power, and all reports indicate considerably more have lost power overnight. There are still roughly 118,000 home and business still without power in North Carolina and Georgia from Hurricane Helene. For the US storage report today, a Reuters survey expectations calling for a net injection of 57-77 bcf last week. The five-year average injection for this week is 98 bcf. LSEG said average gas output in the Lower 48 fell to 101.0 bcfd so far in October, down from 101.8 in September. Gas flows to the seven big US LNG facilities fell to an average of 12.4 bcfd in October, down from 12.7 in September. The 6-10 day forecast calls for below and much below normal temperatures east of the Mississippi, which could boost heating demand in the medium term. However, these trends moderate in the 8-14 day, as warmer than normal temperatures spread eastward.
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