Written Commentary
CRUDE OIL
September Crude Oil was sharply higher early Thursday, reaching above $90 per barrel since May on reports that the Houthis had attacked two Saudi tankers with drones and missiles, indicating their ability to follow-through on their threats from earlier this week. The Saudi Arabian news agency late SPA said the Saudi vessel Encelia was attacked in the Red Sea and was on fire, though the crew was safe. Some ships appear to be making it through, but not enough to counter the narrative of tightening supply and higher costs.
The EIA Petroleum Stocks report on Wednesday leaned bearish against expectations but was be ignored because of the Houthi blockage. Crude and gasoline stocks increased rather than declining last week, and distillate stocks increased more than expect.
PRODUCTS
September USLD and RBOB both extended their rallies to new contract highs overnight on the rally in crude oil and the Houthi attack on a Saudi tanker in the Red Sea. The EIA report on Wednesday was largely ignored.
NATURAL GAS
September Natural Gas broke out on the upside of the recent consolidation early Thursday and reached its highest level since July 9, the day it broke down on news of expanded pipeline access to the delivery at the Henry Hub and on news of impending slowdown in deliveries to a key LNG loading facility due to maintenance. The 6-10 and 8-14 day forecasts show above normal temperatures across the lower 48 states, with the exception of the Great Lakes and Northeast, and this could at least allow US cooling demand eventually reduce the oversupply.
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