Oil prices pulled back after Brent Crude hit its $70 objective and Chinese crude oil imports hit a record high but was a bit shy of expectations, but still strong as global demand is surging, global supply is falling and then there is the dollar. The dollar index hit the lowest level since September and the Euro surged to a three-year high that may inspire risk on buying in oil and other commodities. The oil super cycle that was born in a sea and flood of oversupply is now becoming clearer to most of the oil bears. And then there is that weak dollar that should support oil and inspire more demand for oil in Europe and other countries as their strong currencies still make oil look cheap.    

China's crude oil imports for December came in at 34 million metric tons, while 2017 crude imports rose 10.1% to 420 million metric tons, highest on record but lower than some were looking for. Still, it was a record year for China’s oil imports and the weak dollar should get China buying even more oil in the coming months.

The weak dollar trend for oil is very bullish for oil demand. Countries that got addicted to cheap oil will continue to consume as their strong currency will somewhat buffer the pain from the sharply rising crude oil price.

Gold is on track for its third higher close in a row to its highest level since September and is trading as of 5:28 central time at 1331.80. Heck, at this rate and the breakdown in the price of Bitcoin they may be trading at parity by the end of the day. Bitcoin is trading at 13,941.40.

Oil traders also took profits after President Donald Trump is expected to not use the nuclear option by pulling out of the Iranian nuclear deal and instead just added some new sanctions on the Iranian regime.

A record-breaking gas withdrawal by far, that if it happened a year ago before pipeline capacity was opened up, would have caused a one or 2 dollar spike in the price. This year not so much. As I told Bloomberg news “This invincibility of natural gas production seems to be called into question today with this bigger-than-expected draw,” Phil Flynn, a senior market analyst at Price Futures Group Inc. In Chicago, said by phone.

“The only thing that’s probably tempering the rally is it is warming up a little bit, at least in the short term.” Though a cold spell is set to descend on the eastern half of the country next week, above-normal temperatures are expected from Texas to New York the week after, according to Radiant Solutions. The low in New York may reach 37 degrees Fahrenheit (3 Celsius) Jan. 23, 10 above normal, data from AccuWeather Inc. shows. After a record gas draw, “we’ll be able to replace it quickly as long as the weather warms up as it’s supposed to do,” Flynn said. Inventories totaled 2.767 trillion cubic feet as of Jan. 5, 12.1 percent below the 5-year average and 13 percent below year-earlier levels, according to the report.

Still, the reason why prices did not explode is U.S production is at 84.6 trillion cubic feet versus 77.2 trillion cubic feet. The structural shortage that we had a year ago have somewhat been fixed. Sure, if it gets cold and stays cold gas could hit $3.50 or higher but with record U.S. production it is going to have to stay cold. Globally Chinese natural gas imports were up 26.9% to 68.57 million metric tons.