ENERGY MARKET FUNDAMENTALS
Plain English
Energy futures (crude oil, natural gas, gasoline, heating oil) are driven by the interaction of supply, demand, and storage. Understanding the key fundamental reports — EIA inventory data, OPEC decisions, rig counts — is essential for trading these markets with an edge.
Going deeper
Key energy fundamental data: (1) EIA Weekly Petroleum Status Report (Wednesday 10:30 AM) — crude, gasoline, and distillate inventory levels vs. expectations. Large surprises cause immediate 1-3% moves. (2) EIA Natural Gas Storage Report (Thursday 10:30 AM) — weekly injection/withdrawal vs. consensus. (3) Baker Hughes Rig Count (Friday) — active drilling rigs; tracks future production trend. (4) OPEC+ Production Decisions — cartel controls ~40% of global oil supply; policy changes have lasting price impact. (5) Refinery Utilization Rates — low utilization reduces refined product supply. (6) LNG Export Data — US liquefied natural gas exports are increasingly important for domestic NG prices. (7) API Inventory Report (Tuesday evening) — private estimate, previews Wednesday's official EIA data.
Examples
EIA Double Beat
Crude inventory draws 5M barrels (expected +1M). Gasoline inventory also draws 2M barrels (expected +0.5M). Both crude and gasoline are bearish surprise draws. WTI crude rallies $2.50 within 20 minutes of the report. Refined product crack spreads widen simultaneously.
OPEC Surprise Cut
OPEC+ unexpectedly announces a 1 million barrel/day voluntary production cut in April 2023. WTI spikes $5 overnight. The surprise removes supply from the market faster than analysts projected, reshaping the entire forward curve into deeper backwardation.