Written Commentary
CRUDE OIL
December Crude Oil took out Friday’s low overnight and traded to its lowest level since May 7. An update from IEA said world oil supply will rise by 3.0 million barrels per day in 2025, up from 2.7 million bpd previously forecast, with another 2.4 million bpd increase next year. IEA also lowered its forecast for world demand growth this year to 710,000 bpd from 740,000 in its previous forecast. OPEC left its demand forecast for 2025 unchanged at +1.3 million bpd. Another fly in the ointment for US/China trade relations is that both nations have begun charging additional port fees on ocean shipping firms. China said it had started to collect special charges on US-owned, operated, built, or flagged vessels but clarified that Chinese-built ships would be exempted from the levies. Early this year the Trump administration announced plans to levy the fees on China-linked ships to loosen the country’s grip on the global maritime industry and bolster US shipbuilding. Crude oil found some support yesterday when the Trump Administration backed off its threats of 100% tariffs in Chinese imports, and US Treasury Secretary Bessent said yesterday that President Trump remains committed to meeting Chinese President Xi Jinping in South Korea this month, but a bearish mood has returned.
NATURAL GAS
December Natural Gas is approaching its August low this morning. Above-normal temperatures remain in the forecast for much of the northern US, which will limit heating demand. The 6-10 and 8-14 day forecasts show above normal temperatures continuing over the eastern two-thirds of the lower 48, from the Great Plains to the East Coast. A mostly below normal pattern is expected to continue in west of the Rockies. This should keep furnaces relatively quiet in the northern Plains, Midwest, Great Lakes and Northeast out through October 27. This forecast looks a little more bearish than it did yesterday. US output has slowed some, but apparently not enough to assuage concerns about oversupply. LSEG said average gas output in the Lower 48 states has fallen to 106.4 billion cubic feet per day so far in October, down from 107.4 bcfd in September and a record 108.0 bcfd in August. Likewise, the increase in LNG exports is being discounted. According to LSEG, the average amount of gas flowing to the eight big US LNG export plants has risen to 16.3 bcfd so far in October, up from 15.7 bcfd in September and a above the record 16.0 bcfd from April.
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