Written Commentary
CRUDE OIL
October Crude Oil slightly higher this morning as the trade tries to anticipate the effect the 50% tariff will have on India’s crude oil buying habits. There were estimates overnight that India has saved at least $17 billion by increasing oil imports from Russia since early 2022 but that most of those savings could be wiped out by the tariffs. Russian crude now accounts for nearly 40% of India’s total oil purchases. OPEC+ production increases could provide some offset. In the meantime, the prospects of a Russia-Ukraine peace seem to be getting smaller. Reuters reports that Russia launched a drone attack on energy and gas transport infrastructure across six Ukrainian regions overnight, leaving more than 100,000 people without power.
NATURAL GAS
October Natural Gas was higher overnight after finding support earlier this week at 9-month lows. US production remains strong, and US cooling demand limited. The early Reuters poll for the US storage report this week has a range of expectations calling for US natural gas storage to be +21 bcf to +38 bcf, which would be below the five-year average change for the week at +40 bcf (range +29 to +61). The average amount of gas flowing to the eight big US LNG export plants has risen to 15.9 bcfd so far in August, up from 15.6 bcfd in July and just shy of the record 16.0 bcfd in April. The 6-10 and 8-14 day forecast showed below normal temperatures across the middle part of the nation, with above normal confined to west of the Rockies, not exactly a setup for a late season surge in cooling demand.
PRODUCTS
Like crude oil, October RBOB is slightly higher but inside yesterday’s range down action.
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