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First Look - Oil heads for a second weekly gain

Oil prices have continued to rally, with WTI heading for a second weekly gain
- Prices have pushed above the recent range and are now at the highest level since October
- Declining US inventories helped offset weakness in China’s economy
Middle East prices jump on lower flows from Iran and Russia (BBG)
- Oman and Dubai crude have climbed to a premium to Brent futures, which rarely happens
- This move came after Asian refinery demand strengthened in the last week of December, while supply from Iran and Russia was scarcer than normal
- Broader sanctions from the US and EU have put additional pressure on Russia and Iran’s fleet of tankers

Natural gas fell by 19c to $3.46/MMBtu on Friday morning (8:19 am CT) as weather models weakened the intensity of cold
- A majority of the demand loss this week is from Friday, Jan. 10 to Monday, Jan. 13, when comparing European ensembles
- Over the last 24 hours, forecasts dropped a sizable 18.8 heating degree days (HDDs) (The Commodity Weather Group)
The EIA is expected to report a 125 Bcf draw from underground storage, according to the average Bloomberg survey
- If confirmed, a 125 Bcf withdrawal would compare to the 35 Bcf pull for the same period last year and the five-year average decrease of 104 Bcf
- The weather for January is likely to pull inventories below the five-year average for the first time in two years