DMU: November 20, 2023
Analysis of the latest trends in oil and natural gas markets, including OPEC+ decisions, macroeconomic factors, geopolitical influences, and EIA inventory data.
On Today’s Daily Market Update:
The crude market experienced a sharp decline after the release of inventory data, which showed a net build across the crude complex. Despite a recent rebound, the market remains uncertain, with prices hovering near year-to-date lows and just above replacement cost for incremental barrels. Attention is now focused on the upcoming JMMC meeting, where OPEC's production plans will be discussed. The WTI curve remains modestly in contango, indicating a cautious market sentiment. The Cal 24 WTI strip and the 2025 and 2026 strips have seen modest gains but remain below levels that would encourage increased North American rig activity. The market is now awaiting another set of weekly DOE data, which could influence short-term price movements depending on the balance between crude draws and product builds.
In natural gas, the NYMEX market declined due to a combination of strong production and milder weather forecasts. The Dec contract is trading at a significantly low level, with the market currently expecting an oversupplied year ahead. Despite bullish factors like strong LNG feedgas demand and increased Mexican exports, production levels and weather forecasts dominate market sentiment. The upcoming EIA inventory data will be crucial, with a significant decline in inventory needed to shift the current bearish outlook. The market's future direction hinges on weather patterns and inventory changes, as production strength continues to pressure prices.
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