Written Commentary
CRUDE OIL
October Crude Oil inched higher overnight, extending yesterday’s gains. Russia and Ukraine have stepped up attacks this week, diminishing peace prospects and increasing the chance for more draconian efforts to sanction Russian crude exports. Russia launched an air attack near Ukraine’s border with the European Union yesterday, and overnight Ukraine said it hit a Russian oil refinery and the Unecha oil pumping station, which is part of Russia’s Druzhba oil pipeline that flows into Europe. Hungary said deliveries through the pipeline will be suspended for five days, but the German Economy Ministry said the pipeline was briefly interrupted but there was no impact on the security of supply in Germany. The Trump administration issued more Iran-related sanctions yesterday, targeting 13 entities based in Hong Kong, China, the United Arab Emirates and the Marshall Islands. The large drawdown in US EIA crude stocks this week also lends support. US crude oil stocks remain near six year lows.
NATURAL GAS
October Natural Gas is lower this morning following a modest recovery yesterday off a bullish weekly EIA storage report. The report showed storage was +13 bcf last week versus an average trade expectation calling for +22. This was also at the bottom end of the expected range and the smallest gain for this week of the year in at least six years. The five-year average change for this week is +40. Storage is was -3.0% from a year ago +5.5% versus the five-year average versus -2.4% and +6.5% the previous week. The near term forecast shows the far western US experience a heatwave through early next week with extremes over 100 degrees Fahrenheit as far north as the Pacific Northwest.
PRODUCTS
Gasoline eased slightly overnight following a rally yesterday off supportive EIA stocks and a move above resistance at the 50-day moving average.
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