Cold As Ice. The Energy Report 02/21/2025

The global oil market seems to be frozen in time. The surge in demand due to cold weather in the United States is a contributing factor as the Energy Information Administration released a report that had icicles hanging from it. The oil market is attempting to balance the bearish factors associated with President Trump’s “drill baby drill” policy and the streamlining and removal of ridiculous regulations against the potential tightening of sanctions on Iran and Russia. Additionally, there is the possibility that OPEC+ will maintain its current production levels, refraining from adding any barrels to an already constrained oil market.

The Energy Information Administration (EIA) weekly status report showed the impact of the cold weather on the oil producing areas. The EIA showed that oil refinery inputs averaged just 15.4 million barrels per day, a decrease of 15,000 barrels per day from the previous week.

Refineries are operating at 84.9% of their capacity. While some refineries may be undergoing maintenance, the reduction in operations was also affected by the cold weather. The drop in refinery runs contributed to a 4.6-million-barrel increase in crude oil supplies, but distillate inventories fell by 2.1 million barrels which leaves supply 12% below the Five-Year average.

Cold weather has increased U.S. oil demand to 20.4 million barrels per day over the past four weeks, driven partly by higher distillate fuel demand. Distillate supplies are up 14.2% from a year ago. These factors are keeping oil in a range. Basically right now any trade that you can buy near 70 should be very good value. Currently $73 seems to be the major resistance and a close over $73 should send us up to 75 quite quickly.

On top of that we think the geopolitical risk is going to start to creep back up again. Reports that Iran is able to move more oil to China in recent days could cause a blowback by the Trump administration.

The despicable Hamas terrorist are adding to risk. Reports read, “Israeli military said Friday it had positively identified the remains of two young hostages but another body released by Hamas under a ceasefire deal was not the boys’ mother as the militant group had promised. The revelation was a shocking twist in the saga surrounding the Bibas family, who have become global symbols of the plight of Israeli hostages held by Hamas, and threw the future of the fragile ceasefire into question. “This is a violation of utmost severity by the Hamas terrorist organization,” the army said in a statement. During the monthlong ceasefire, Hamas has been releasing living hostages in exchange hundreds of Palestinian prisoners. Thursday’s release marked the first time the group has returned the remains of dead hostages.

Winter is not giving up, yet neither is the natural gas rally.  Fox Weather reports that, “Friday brings the final day of the record-breaking arctic outbreak that has frozen the central U.S., but the danger isn’t over. While some areas are experiencing a slight reprieve from the extreme lows seen earlier in the week, subzero wind chills persist, stretching from the northern border down to the Gulf Coast. More than 80 locations are bracing for more likely record-low temperatures and sub-zero wind chills, with some facing their coldest late-season readings ever.

The EIA said that working gas in storage was 2,101 Bcf as of Friday, February 14, 2025, according to EIA estimates. This represents a net decrease of 196 Bcf from the previous week. Stocks were 386 Bcf less than last year at this time and 118 Bcf below the five-year average of 2,219 Bcf. At 2,101 Bcf, total working gas is within the five-year historical range. After the warm spell, some predict it will get cold again. This expectation is maintaining the demand for natural gas. It appears that the future of natural gas usage largely depends on weather conditions.

Download the Fox weather app to keep up with the latest on this winter weather that is driving natural gas prices. Stay tuned to the Fox Business Network, the only network in America that is invested in you.

Call to open your futures trading account today by calling Phil Flynn at 888-264-5665 or email me at pflynn@pricegroup.