Written Commentary
CRUDE OIL
December Crude Oil is higher this morning, as it appears to be drawing support from China’s interest rate cut over the weekend as well as some unease over the Mideast war. US Secretary of State Antony Blinken has arrived in Israel today as he seeks to restart talks to end the war in Gaza and contain the conflict in Lebanon. The market has been fluctuating between concerns about escalation when fighting flares up and concerns about demand when disappointing Chinese economic data is released. So far, the Mideast war has not resulted in a cutoff of supply, save the occasional concern about shipping in the Red Sea, and recent US attacks on Houthi targets have likely eased those concerns. Early expectations for the US inventory reports this week have US crude stocks up 100,000 barrels, with gasoline expected to be down 1.6 million and distillates down 1.9 million. Refinery utilization is expect to fall 0.1% to 87.6%. China’s refineries processed 14.29 million barrels per day of crude oil in September, up from 13.91 mbpd in August but down 5.4% from September 2023.
NATURAL GAS
December Natural Gas may have had an outside day-higher close yesterday but not necessarily a convincing low for the move. The market had gotten technically oversold after being pressured by the extended forecast for mild weather over most of the US and by a reduction in power plant demand from the outages in the wake of two major hurricanes. The NWS 6-10 and 8-14-day forecasts show an expansion of a cooling trends over the western US, but the eastern half still shows much above normal temperatures, which could keep furnaces cool in the northern states for another two weeks. There was a story in Reuters today about LNG buyers wanting flexibility to adapt to varying power plant demand, something they have not been able to attain with their long term contracts with Qatar. This may create more opportunities for US exports.
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