Written Commentary
PRODUCTS
BP said yesterday that operations at its 440,000-barrel-per-day refinery in Whiting, Indiana (the largest in the Midwest) were affected by to flooding caused by a severe thunderstorm Monday night. They did not say which units were impacted or whether production was affected. The EIA report will be released this morning. Like crude oil, October RBOB is higher this morning but confined to the range of the past week or so.
CRUDE OIL
October Crude Oil is higher this morning but inside the range of the last the five sessions. Optimism about an end to the Russia/Ukraine war has faded, and this may be lending some support today. Then again, the retaliatory threats against Russian crude have also faded, with President Trump seemingly backing off on placing extreme tariffs against buyers of Russian crude oil. There were reports today that two of India’s state-run refiners have resumed their purchases of Russian crude oil after suspending them for a while when Trump was threatening tariffs as high as 100%. The Trump administration did go ahead with an additional 25% tariff against Indian goods anyway, bringing the total to 50%. Interestingly, India this week lowered its import duties on cotton, which is being viewed by some as an attempt to gain favor with the Trump administration. Reuters also reports that in recent weeks Chinese refineries bought 15 cargoes of Russian oil for October and November delivery.
NATURAL GAS
October Natural Gas fell to its lowest level since September 2021 yesterday and extended that move slightly overnight. The nearby contract has fallen to its lowest level since last November. The latest 6-10 and 8-14 day forecasts showed below and much below temperatures in the eastern two-thirds of the lower 48 states, with the coldest temps centered around the Midwest. Above normal temps retreat to the PNW, Florida and the southern tip of Texas. This further reduces the odds of any chance of tightening in US supply. It is getting late in the cooling season. One of these weeks we may start talking about heating demand. LSEG said average gas output in the Lower 48 states has risen to 108.5 billion cubic feet per day so far in August, up from a record 107.8 bcfd for the month of July.
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