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First Look - EIA expected to report a -257 Bcf withdrawal from gas storage

Oil is trading lower, reversing some gains
- Yesterday, the EIA reported another withdrawal from US inventories, with storage levels well below average and below the five-year range
- Prompt spreads have widened, potentially indicating a tighter near-term market
- Saudi Aramco has received requests from Indian and Chinese crude buyers for as much as 750 MBbl/d of additional supply following recent sanctions
  - Refiners in India are rushing to make payments for existing Russian purchases, while the amount of crude stranded off the coast of China has swelled
Trump team prepares sanctions plan for Russia, Iran, and Venezuela (BBG)
- The approach to Russia will involve either easing sanctions to help secure a peace deal in Ukraine or ramping up sanctions to increase leverage
- Policy options for Iran and Venezuela are being considered, with more aggressive actions likely
- On Wednesday, officials added measures that may make it harder for Trump to unwind recent sanctions, re-designating several entities and requiring the president to notify Congress of plans to lift restrictions
- Any reduction of Russian sanctions would pose a bearish risk to crude prices, as the sanctions have limited Russia’s ability to export oil

The February contract traded mostly flat Thursday morning at $4.10/MMBtu (8:15 CT)
- Fun fact: January 21 is the peak cold in the forecast, and that day ranks third coldest ever, only behind 1984 and 1985 – in terms of gas-weighted heating degree days Lower 48
- Earlier model runs had snow reaching the Texas Gulf Coast that has now dissipated from the American model runs
- Gas analysts expect a massive withdrawal from underground storage
The EIA is expected to report a sizable 257 Bcf pull on gas inventories today for the week-ended January 10
- The Bloomberg survey ranges from -266 to -242 Bcf, with the average estimate at -257
- If confirmed, the draw would compare to the 150 Bcf withdrawal last year and 128 Bcf for the five-year average
- Early reads for the following week are also impressive, as the market expects a draw of around 250 Bcf
- AEGIS notes that weather forecasts still have analysts expecting nearly 1 Tcf of drawdown for the month of January <insert sideways-looking eyes emoji>