Just when you thought it was safe to put take out the Iranian risk premium and the price of a barrel of oil it came back in dramatic faction. Just when the market was floundering and enjoying the extra barrels that’s been getting from Venezuela, we saw a big surge in prices after reports came that the US military successfully shot down an Iranian drone with an F35 fighter from the USS Arizona now. The drone approached the carrier “aggressively” with “unclear intent,” but no personnel were harmed, and the action was purely in self-defense. Oil futures actually ticked up about $1 per barrel in response,
Yet it seems that this has not derailed President Trumps desire to try to negotiate an end to Iran’s nuclear ambitions or at least buy some time until the Iranian regime can fall. President Trump stated, “We are negotiating with Iran right now,” and “Talks are still going on with Iran.” He added a forward-looking note: “There’s more than one meeting with Iran,” and stressed caution, saying, “We don’t want a repeat of Midnight Hammer with Iran.” These comments reflect a commitment to dialogue, even as tensions simmer.
Despite Iranian officials voicing confidence and confirming upcoming negotiations with the US, doubts linger regarding the sincerity and practicality of these talks. Their assurance seems more like necessity than genuine enthusiasm. Scheduled for Friday in Oman, the discussions will focus on nuclear issues, with potential participation from Saudi Arabia and Egypt. While relocating the talks to Oman is intended to keep the agenda focused and productive, questions remain about whether this move will truly foster a fair resolution and enhance regional stability—especially when the stakes are so high for crucial oil passageways like the Strait of Hormuz.
Oil also had support from a Major League drawdown in crude oil inventories even larger than the 4 million barrels that I was expecting and boy, it’s a jaw-dropper! For the week wrapping up around January 30/31, 2026, we saw crude oil inventories take a nosedive—down a whopping 11.1 million barrels. That’s not just a miss on expectations; it’s a wild swing when traders were bracing for a modest build of 0.7 million barrels. The previous week’s draw was barely a blip at 0.25 million
Meanwhile, climbed by 4.7 million barrels— because people couldn’t find their cars in the snow more than likely, but it should put downward pressure on prices at the pump.
couldn’t keep up, though, dropping by about 4.8 million barrels as the cold ramped up demand.
And let’s not forget Cushing, Oklahoma—the heartbeat of WTI delivery—where crude stocks shrank by another 1.4 million barrels. Even the Strategic Petroleum Reserve (SPR) put up a little gain, with a build of 0.2 million barrels tossed into the mix.
This was described in market commentary as a massive crude draw, counter to expectations and one of the sharper declines in recent years, potentially influenced by factors like winter storms distorting flows. It contributed to upward pressure on oil prices in after-hours trading, with mentions of WTI around the low $60s and in the high $60s amid other geopolitical factors.
The official (Energy Information Administration) Weekly Petroleum Status Report typically follows on Wednesday mornings and provides the more authoritative government data—often similar in direction but with differences in magnitude. As of now (early February 4), that EIA release would be the next key update.
I was told telling all these young kids that they haven’t experienced a real winter but now they have in fact according to Kemp energy the US 48 states are now 60% through the winter heating season have accumulating the highest heating demand for the last seven years!! Tet the warmup in temperatures and problems with maintenance is some LNG export terminals created a situation for that major correction in .
Kemp said that residents have racked up an impressive 2,509 population-weighted heating degree days—surpassing any winter since 2018/19 and even beating the chilly stretch back in 2014/15. This year’s heating degree days stand at 145 above the ten-year average, a remarkable 6% increase (or +1.22 standard deviations). Since January 18, heating demand has soared above average every single day, thanks to a sustained cold snap that more than made up for the earlier warm spell between mid-December and mid-January. The Lower 48 are truly experiencing a classic winter! The type of winter is where you will have to walk 6 miles to school in the snow uphill both ways.
Yet Nat gas is looking ahead and unless we get another major blast for Nat gas winter might be over soon but if we get another blast all bets might off This is because According to Celsius Energy, natural gas production has rebounded from recent freeze-offs but still lags nearly 4 BCF per day behind the record levels seen in December. Current output stands at 107.1 BCF per day, which is only 2.1 BCF per day higher than last year. This modest increase is insufficient to offset the year-over-year jump in LNG export demand, which has risen by 3 to 4 BCF per day.
Criterion Research shared some market price negative news reporting that Pipeline company started maintenance work on February 3 at the Dugas Road station, which has caused a big drop in the amount of natural gas flowing through Louisiana—by more than 700 million cubic feet each day. As a result, gas deliveries from the Mermentau River connection to the TransCameron Pipeline dropped sharply, going from 1,007 million cubic feet per day to just 350 million. Down to storage eating the concerns of the multi year record-breaking demand numbers that might actually produce a record-breaking drawdown in natural gas inventories in this week’ Pipeline operator TC Energy began work on February 3 at the Dugas Road meter station, cutting ANR’s gas receipts across Louisiana by more than 700 million cubic feet per day. Deliveries via the Mermentau River interconnection to the TransCameron Pipeline fell from 1,007 MMcf/d to 350 MMcf/d.s report.
Yet is a warmup coming? Fox Weather writes that “So far this winter, the East has endured frigid temperatures and record snowfall, and if you’re tired of the constant chill, some relief may be in sight.
While much of the West hasn’t seen winter weather it is used to and left to bake under record heat and drier-than-average conditions, a shift across the Lower 48 is possible by mid-month, with winter conditions returning to the West as the East finally begins to warm. Though initial projections called for a major disruption to the Polar Vortex coming this February that would have allowed for significant arctic outbreaks in the eastern U.S., forecast guidance has evolved. Latest forecast guidance now shows the vortex stretching rather than splitting, while remaining displaced from North America. The cold ushered in late January was caused by the vortex remaining strong but displaced over Canada, sending extreme cold into the U.S.
Both the Arctic Oscillation (AO) and the Pacific–North American (PNA) pattern provide valuable insight into longer-term trends across the Lower 48.
Currently, the AO is trending toward neutral into February, suggesting a decrease in the frequency of arctic air intrusions that had millions across the U.S. battling below average temperatures in January. Meanwhile, the PNA is trending negative, signaling a more active storm pattern in the West.
According to the FOX Forecast Center, this setup is clearly reflected in the Climate Prediction Center’s (CPC) 8 to 14-day temperature and precipitation outlooks, which show above-average temperatures across much of the East and above-average precipitation across the West. An increasingly active pattern across the West will be beneficial, as much of the region has been well below average in terms of snowfall. This significant departure from normal is largely due to a persistent ridge of high pressure that has dominated the West for much of winter so far, resulting in record warmth that will persist later this week.
As this pattern begins to break down, more beneficial snowfall is likely to return, even to lower-elevation areas such as Salt Lake City over the next 10 days. Salt Lake City is currently reporting just 0.1 inches of snow for the season, which is nearly 33 inches below the seasonal average to date according to Fox Weather.
