Oil & Gas Prices - Feb 11

[dan_s]

Trading Economics:
Oil
WTI crude oil futures advanced around $73.25 per barrel on Tuesday, extending a nearly 2% gain from the previous session, driven by signs of tighter Russian supply and rising supply risks.
> Reports showed Russian production fell further below its OPEC+ quota in January, while new US sanctions targeted individuals and tankers transporting Iranian crude to China, aiming to pressure Tehran.
> Adding to supply risks, Trump urged Israel to end its ceasefire with Hamas if hostages aren’t returned this weekend, raising the threat of renewed conflict as both sides accuse each other of violating the deal.
> However, gains were capped by caution over mounting trade tensions and broader economic uncertainty. Trump’s recent steel and aluminum tariffs could disrupt the US energy sector, particularly oil drillers reliant on specialty steel unavailable domestically.
> Meanwhile, soaring natural gas prices in Europe have made burning oil more cost-effective, potentially boosting demand.

Natural Gas
US natural gas futures rose to $3.53/MMBtu, driven by higher LNG exports and colder weather forecasts, which are expected to boost heating demand. > Gas flows to LNG export plants also increased to 15.1 bcfd so far in February, up from 14.6 bcfd in January, nearing December’s record. < U.S. LNG export capacity will soon be over 17 Bcfpd.
> Looking ahead, meteorologists predict colder-than-normal weather through February 22, which will likely maintain high demand. < The WeatherBell.com long range forecast now shows colder than normal temperatures in the eastern U.S. through at least the first week of March.
> Extreme cold in January likely prompted record-level withdrawals from storage, potentially close to the all-time high of 994 bcf in January 2022.
> On the production side, February gas output in the Lower 48 states has risen to 106.1 bcfd, up from 102.7 bcfd in January, though daily production is set to fall slightly. < Winter storms rolling through Ohio and PA could cause well freeze offs.
> Meanwhile, Chinese tariffs on US products including LNG, are due to take effect on Monday, with no sign as yet of progress between Beijing and Washington. < Other markets in Asia and Europe will take all of the LNG we can deliver.

The front month NYMEX contract for HH natural gas (MAR25) might pull back a bit on Thursday because the draw from storage is now expected to be 90 Bcf for the week ending February 7. That compares to the 5-year average draw of 141 Bcf and last year's draw of 49 Bcf.
For the last three weeks of February, draws should be much higher than the 5-year average and total more than 300 Bcf higher than last years draws during February, 2024. If so, I expect the APR25 contract to move firmly over $3.50.

[dan_s]

Tomorrow's EIA report is likely to show a build in crude oil inventories, which is normal for this time of year.

Refiners will draw down crude oil inventories to begin making more gasoline in March.