Written Commentary
CRUDE OIL
December Crude Oil gapped lower today after reaching its highest level since August 1 on Friday. The Kurdistan-Turkey pipeline restarted over the weekend after several delays and after being stopped for two years. Initial flows are expected to add 180,000 to 190,000 barrels per day of crude to flow to Turkey’s Ceyhan port and is ultimately expected to bring up to 230,000 bpd. There are report that OPEC+ is expected to approve another crude production hike of at least 137,000 bpd at its meeting on Sunday. However, the group’s output to date has been almost 500,000 bpd below the target. One of the key supporting features for the market rally last week was the damage imposed on Russian oil infrastructure from Ukrainian drone strikes. Some minor damage was reported on Saturday with a hit on an oil pumping station. In the meantime Russia hit Kyiv and other parts of Ukraine yesterday with one of the most sustained attacks since the war began. Saudi Arabia is expected to raise November crude oil prices for Asian buyers.
NATURAL GAS
The 6-10 day forecast has some cooler than normal temperatures showing up in portions of the western US, which is a little less bearish than recent forecasts. However, both the 6-10 and 8-14 day show above normal temperatures east of the Rockies, which suggests heating demand will trend low out through October 12 and keep US supply gaining at an above-normal rate. Last week’s US EIA report showed US natural gas storage was up 0.4% from a year ago and 5.7% above the five-year average, putting storage is back above year-ago levels for the first time since January. The Baker Hughes rig count showed US natural gas rigs in operation were down 1 to 117 last week. This is the lowest since July 18 but is up from 99 rigs a year ago and above the five-year average of 110.
PRODUCTS
November RBOB and November ULSD are lower this morning and have given back their gains from Friday. Product prices drew support last week from reports of Russia restricting exports in the wake of Ukrainian drone attacks that damaged Russian oil infrastructure and caused fuel shortages. Russia had banned re-sellers from exporting diesel through the end of 2025, but it did 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.
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