Oil holds two-day gain as Ukraine geopolitical risk persists
The WTI prompt-month contract fell $0.12 to 59.55/Bbl on Friday morning (7:45 AM CT)
A ceasefire remains distant as Putin rejects key elements of the US-backed plan while Ukraine intensifies attacks on Russian oil infrastructure
Ukraine struck Rosneft’s Syzran refinery with 170 MBbl/d capacity and hit a port facility on the Azov Sea after earlier attacks halted primary processing at Rosneft’s Saratov refinery
Market takeaway is that geopolitical risk is helping the front of the curve but fundamentals still point to a heavy physical market as supply continues to outpace demand
China plans 50% increase in deep-water drilling by 2030 (Bloomberg)
China plans to boost deep-water drilling activity by 50 percent as offshore production targets rise toward roughly 300 kb/d
Offshore supply may peak around 1.45 mb/d near 2030 and hold flat into the 2040s
Natural gas surges as cold outlook continues
The January Henry Hub contract is trading near $5.25/MMbtu this morning following a colder shift in weather forecasts
The Summer 2026 and Winter 2027/2027 seasonal strips are also higher by about 7c
Lower-48 population-weighted weather forecasts continue to show temperatures below the ten-year average for the next two weeks, supporting expectations for stronger gas demand
Coldest December since 2009 (CWG)
This December is currently forecast to be the fourth coldest of the past 25 years, and the coldest December since 2009
This should result in significantly larger withdrawals from storage compared to the five-year average
The cold weather is primarily expected to impact the Midwest and Northeast regions
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