The oil market is ending its incredible run turning south just after the Super Bowl. Oil bears up until this point may know how the 49s feel but it looks more and more likely that the upside run is coming to an end. With reduced runs continuing into Seaway and potential talks with Iran over its nuclear program, the bulls have shined bright but now, for the short term, it is time to change sides. With maintenance season ahead the demand for crude will drop and the prices seem to be reflecting that new reality.
Oil products like RBOB looks like it is a bit toppy. After the squeeze play in February the market seems a bit more confident that we can see supply improve ahead of the next expiration. Heating oil seems to have a bit more momentum as does the gas oil in Europe but may be held back by the weakness in crude and RBOB.
Over all we look for crude supply to increase this week by 3 million barrels, gasoline up by 2, distillates up by 1 and runs down 1.0.
Natural gas short term looks terrible but long term we could be putting in a major bottom that will be the subject of an upcoming report on “The Trade.” One reason may be the fact that demand for natural gas is rising sharply. Dow Jones reported that for more than three years, U.S. natural gas prices have struggled under the weight of soaring production that outpaced fuel consumption growth. But data suggest the weight is lifting. Global Hunter Securities says monthly November gas-consumption data released late Thursday, showed 7% demand growth from last year, "suggests there is a much better alignment of production to future consumption," which will prevent deep price declines. November demand rose to the highest ever for the month, while production growth rose 1.6% from year earlier.