DMU: November 21, 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:
In the oil market, WTI and RBOB experienced a quiet day, while diesel continued to show signs of recovery with the January crack spread climbing over $40/barrel. The new front month WTI contract closed with a minor decrease, reflecting a cautious sentiment among producers. Slight losses in Cals 25 and 26 suggest hedge requirement selling or risk reduction. With DOE stats and the OPEC meeting update approaching, the market is bracing for potential volatility. API data indicated a crude build and modest product draw, which, if confirmed by DOE, could impact market dynamics. However, the market might overlook this in anticipation of OPEC's decision and the end of the refinery outage season.
In natural gas, the NYMEX market continued to expand its record-setting contango, reflecting a bearish winter outlook. The December contract closed lower, with declines across the board, possibly driven by producer selling. Weather models showing cooler temperatures were overshadowed by warmer forecasts for the later period. Record production levels are countering other bullish factors like strong LNG feedgas demand and Mexican exports. Tomorrow's EIA inventory data will be critical, with the market expecting a small injection during the withdrawal season. The outcome of this report, coupled with weather model updates, will likely influence the short-term direction of the market, especially with the December contract nearing expiry.
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