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Lower inventory draw pushes natural gas lower – ING

Crude oil prices continue to trade soft, with ICE Brent trading at US$72.7/bbl as of writing and NYMEX WTI trading at around US$68.6/bbl. The Brent forward curve continues to tighten, with the Jan-Feb spread increasing to a 6-month high backwardation of US$0.55/bbl today compared to a recent low of US$0.18/bbl on 11 November. The market expects the crude oil market balance to ease further over the coming months as OPEC+ delays output hike plans, ING’s commodity analysts Ewa Manthey and Warren Patterson note.

The crude oil market balance to ease further

“Weekly data from the Energy Information Administration (EIA) shows that crude oil inventory in the US dropped by 1.8m barrels last week, a larger draw than market expectations of around 0.5m barrels and mainly due to lower imports. Crude oil imports fell by 1.6m bbls/d last week to 6.1m bbls/d as imports from Latin America softened. Exports strengthened by 0.3m bbls/d to 4.7m bbls/d.”

“For refined products, gasoline inventory increased by 3.3m barrels to 212.2m barrels while distillate inventory increased by 0.4m barrels to 114.8m barrels on higher refinery output. Refinery utilization increased 0.3% to 90.5% over the last week. Refinery utilization in the US over the past few weeks remains high when compared to seasonal averages.”

“US Henry Hub prices dropped by around 7% yesterday to settle at US$3.2/MMBtu with prices again softening this morning as inventory draw slowed. Weekly data from the EIA shows that natural gas inventory dropped by just 2Bcf last week, compared to the preceding week’s 3Bcf draw and a 5-year average draw of around 30Bcf at this time of  year. Natural gas demand has been slow to pick up even as the US experiences colder than usual weather.”

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FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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