Written Commentary
CRUDE OIL
November Crude Oil extended this week’s rally overnight and approached the September high at 65.43. The announcement that Russia will put a partial ban on diesel exports until the end of the year as well as extend its ban on gasoline exports is viewed as evidence that that the Ukrainian drone attacks are causing significant damage to Russia’s refining capability. Russia is considered a major exporter of diesel, and the analytics firm Kpler estimated that the nations shipped around 880,000 barrels per day in 2024, representing about 12% of global diesel seaborne exports. The diesel ban applies to traders but not refiners, which account for around three-quarters of their total exports, but the announcement still led to a sharp rise in global diesel prices yesterday. NATO’s warning of a response to further violations of its airspace has ratcheted up tensions and raised prospects of additional sanctions on Russia’s oil industry.
NATURAL GAS
November Natural Gas is lower this morning after a three-day bounce off contract lows this week. Yesterday’s EIA Gas storage report came in close to expectations and very close to average. The report put US storage at 3,508 bcf for the week ending September 19, +75 bcf from the previous week versus an average trade expectation of +74 and a five-year average change for the week at +76. Storage was up 0.4% from a year ago and 5.7% above the five-year average versus -0.5% and +5.9% the previous week. This puts storage is back above year-ago levels for the first time since January. The weather forecasts continue to show a predominance of above normal temperatures over the lower 48 US states for the next couple of weeks, which will limit early-season heating demand. However, the introduction of some cooler than normal temps along the mid-Atlantic seaboard may be a little less bearish than yesterday. Tropical Storm Imelda is currently near Haiti and it could threaten the US South Atlantic coast early next week.
PRODUCTS
Product prices have drawn support his week from reports of Russia restricting exports in the wake of Ukrainian drone attacks that have damaged Russian oil infrastructure and have caused fuel shortages. The news yesterday was that Russia was banning re-sellers from exporting diesel through the end of 2025. The move does not extend to the country’s largest refiners. Government officials also said a ban on gasoline exports will be extended until the end of the year. Earlier this week there were reports that gas stations in Russia are limiting sales to customers.
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