Cold Weather: Arctic air has been moving south into North America and Europe. The polar vortex is expected to linger in the area for an extended period increasing demands on energy infrastructure and creating freeze-related damage in the southern United States. According to AccuWeather analysts, this could be the coldest January since 2011 for the areas impacted. Market expectations that heating oil would be used to fill the gap that natural gas cannot fill. The northeast of the United States is one of the largest home heating oil consuming regions in the world. 

EIA Data: U.S. inventory data was released yesterday, showing larger builds on products while crude oil inventories fell. Product positions increased largely due to the combination of lack of demand while refiners continued to produce product. Demand for products hit a two-year low. The crude inventory drew down 1.178 million bbl while the builds on gasoline and diesel were 6.406 and 7.717 million bbls respectively. 

Eagle S: Before the new year, Finnish authorities detained a ship - the "Eagle S" that was thought to be transporting Russian crude oil illegally and became the suspect vessel in damaging undersea information and electric cables. The owner of the ship had sought release of the vessel in Finnish courts - stating the ship was illegally detained. The court, however, dismissed the petition and the ship still remains in Finnish custody while the investigation continues. 

Market Overview: Prices appear to be letting steam out this morning from the last few sessions of increases as products are split and WTI is slightly higher. While headlines of increased demand expectations from winter weather had helped prices higher in recent sessions, a decrease in demand reflected in yesterday's DOE report might have tempered some optimism on the supportive side. 

US distillate demand ended 2024 298,000 bpd higher than the same period in 2023. Buying appears to outpace the year prior in the month of December as gains in pricing were seen fairly consistently through the month. Coupled with winter storms that were all but non-existent in the prior year, the demand increase could be linked to multiple factors. 

Crude futures climbed during the session today as forecasts of prolonged cold in Europe and North America boosted demand outlook for heating oil and therefore crude oil. Meteorologists are predicting cold temperatures deep into the Southern, Eastern, and Midwestern United States until at least mid-January. Large sections of Europe are also included in the weather models. Additional support came from a drop in the value of the US Dollar during the session- a weaker dollar makes dollar-denominated futures cheaper for investors using non-dollar denominated currencies. Looking broader at the week, however, the dollar was on track for its best week in months based on expectations that the U.S. economy will be resilient and outperform its peers globally in 2025 - keeping pressure on futures moving even higher. All in all, WTI is set to close the week out about 5% higher - the highest value since October 11, 2024.