Market Insights > First Look

First Look - Oil climbs ahead of EIA inventory report

Oil is up more than $1 to the highest level since October
- Prices have expanded above the recent trading range, with WTI near $73/Bbl this morning, the highest level since October
  - Saxo Bank attributed the rise in prices to technical momentum rather than underlying fundamentals, adding that the fundamental upside appears limited in 2025
- China's President Xi Jinping expressed optimism for economic progress in 2025, despite challenges
  - He expressed confidence in growth, citing a 5% GDP growth in 2024
  - China’s manufacturing PMI came in at 50.5 in December, below market expectations of 51.7
- The US dollar index has continued to rally, now at the highest level since late 2022, which is usually a bearish factor for oil prices
The API forecasts a 1.4 MMBbl withdrawal from US crude inventories (BBG)
- The official EIA data release will occur later this morning
- This would follow last week’s sizable draw from storage and would be the sixth consecutive decline in inventories

Natural gas was trading 6c higher to $3.70 as cooler forecasts weakened but lasted longer
- All but one day in the next two weeks of weather forecast shows below-average temperatures
- The intensity of the cold for the next two weeks has moderated over the past few days
- Lower 48 dry gas supply flexed up to 105.9 Bcf/d on December 31, according to data from S&P Global
  - Today, nominations were off the high and modeled at 104.9 Bcf/d
Gas flows into LNG facilities near the record set in December 2024
- LNG feed gas nominations were measured at 15.17 Bcf/d today, just under the recent record of 15.2 Bcf/d (Criterion Research)
- The amount of LNG flows was helped by the addition of Corpus Christi Stage 3 and Plaquemines LNG export terminals
Russian gas to Europe via Ukraine stops transit (PGJ)
- Russian gas exports through Ukraine have stopped, ending Moscow's long-held dominance over Europe's energy markets, while alternative supply arrangements and increased LNG imports are mitigating the impact on EU gas prices
- Russian gas exports via Ukraine ended on New Year's Day as Ukraine declined to renew a transit agreement
- EU gas prices are not expected to be impacted as alternative supply arrangements have been made
- Ukraine and surrounding regions are affected, with Transdniestria cutting heating and hot water supplies
- AEGIS notes that if international gas prices increase, Henry Hub should be unaffected as the US ships all the LNG it can already