Energy Futures Face Skepticism

Crude Oil

Crude oil below $70 as efficiency drops to 3-month low

• WTI crude oil futures continue to tumble and settled at $69.76 per barrel on Friday, marking their first monthly decline since November due to geopolitical tensions and economic uncertainty.
• US President Trump announced he was reversing a license granted by Biden that allowed Chevron to operate in Venezuela, which could tighten global oil supply.
• Chevron exports about 240k bpd from Venezuela, and halting its operations will reduce the country’s oil output.
• Meanwhile, EIA data showed US crude inventories fell by 2.33 million barrels last week, defying expectations of a build.

Gasoline

Gasoline futures pressured downwards, net exports weakened y/y

• US gasoline futures dropped below $2 per gallon, the lowest since December 22, due to rising domestic inventories and weaker oil prices.
• EIA reported an unexpected increase in gasoline stocks by 369k barrels to 248.3 million, despite a rise in gasoline demand to 8.45m bpd from 8.24m bpd.
• President Trump also stated that his administration would rapidly fill the Strategic Petroleum Reserve (SPR), criticizing Biden’s use of it to lower gasoline prices.
• Meanwhile, fears that President Trump’s tariffs on China and other trading partners could slow economic growth added to worries about future energy demand.

Natural Gas

Natural gas prices alleviate after rally, storage declines more than expected

• US natural gas futures fell nearly 3% to below $3.85 per MMBtu, hitting a two-week low, driven by record production levels and forecasts for milder weather, which are expected to reduce heating demand.
• Meanwhile, the EIA reported a 261 bcf gas storage withdrawal for the week ending February 21—below analysts’ forecasts of 266 bcf but well above the five-year average of 141 bcf—due to last week’s extreme cold.
• Gas production in the Lower 48 states rebounded to 105.2 bcfd by February 27 after falling to 100.5 bcfd on February 19 due to freeze-offs.
• Looking ahead, meteorologists expect warmer-than-normal weather across the Lower 48 through March 14, which may limit further price gains.