Contributed By: Robbie Fraser, Commodity Analyst | Schneider Electric Energy & Sustainability Services
January’s Markets Watch rings in the New Year with a bit of extra focus on the EIA this month. In fact, six reports across six dates should illustrate current trends on petroleum status and natural gas storage. Meanwhile, the World Economic Forum will hold its annual meeting in Davos, Switzerland later in the month. Expect a number of resolutions – just perfect for January – potentially related to climate change and policies to encourage a more sustainable industrial revolution among emerging economies.
January 16, 23, 30 – EIA Weekly Petroleum Status Report
Global oil prices wrapped up a roller coaster 2018 and have already started the new year with more questions than answers.
- Will OPEC’s planned cuts really happen?
- Will that be enough to boost prices or will U.S. shale move in and make up the difference?
- And perhaps most importantly, what will President Trump have to say about it all on Twitter?
For those focused on the energy cost impact of fluctuating oil prices, it can quickly become an overwhelming set of variables to consider.
In reality, one number stands out as a major driver of long-term price movements: U.S. inventories. The U.S. EIA provides one of the most important and most reliable weekly indicators of the oil market’s supply/demand balance with the publications of weekly crude and refined product inventory data.
In recent weeks, those reports have shown combined crude and product stocks steadily trending higher, which translates to bearishness for crude prices. However, OPEC will target those same inventories as Saudi Arabia and others slash exports in the weeks ahead. If those efforts manage to reverse U.S. inventories lower, expect prices to find some support heading into next month.
January 17, 24, 31: EIA Natural Gas Storage Report
While Wednesday oil numbers might be more likely to grab headlines, those focused on their energy bill know the real market mover comes a day later. That’s when the EIA reports the latest weekly figure for natural gas in U.S. storage, which serves as the de facto figure to gauge the impact of winter weather, shale production and overall demand. It’s a number that always has a chance to move the market, but it deserves added attention during winter when weather’s impact on market demand is greatest.
Essentially, the colder the weather, the more gas will be pulled out of storage to meet additional heating demand. This unpredictability creates a wide range of realistic expectations each week, in turn setting up some serious potential volatility for market prices. Eventually, the gas that’s left in storage gets carried over for the remainder of the year, which means winter storage changes have a direct route to impacting prices throughout the year ahead.
January 22-25: World Economic Forum Annual Meeting in Davos, Switzerland
If you’re looking for a “who’s who” list of decision-makers in the modern global economy, just check the guest list at Davos this month. Each year the forum combines some of the highest profile economists, politicians and CEOs as they turn an eye to the future of world economic development. While the topics are wide-ranging, energy is guaranteed to make an appearance on the agenda with this year’s topics including plenty of focus on climate change and encouraging a more sustainable industrial revolution among emerging economies. Energy is inherently interwoven in these discussions, and plans made here can become the policies impacting the market for years to come.
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