Written Commentary
CRUDE OIL
November Crude Oil was under pressure early Friday on reports that EU countries has discussed a French proposal on Friday to release diesel stocks in response to US pressure. Under the proposal, European countries would release 50 million barrels of diesel, and International Energy Agency members would release 50 million barrels of crude oil. This follows reports this week that the Trump administration had told Germany and France to draw down emergency inventories or face a potential US diesel export ban. This counteracts the news on Thursday that Chinese refiners had suspended oil product exports for October as Beijing looked to preserve domestic stocks.
PRODUCTS
Product prices were lower early Friday on the news that European leaders were discussing diesel releases under threats of a US diesel export by the Trump administration. On top of that, there was news that Russia would consider a partial lifting of diesel export restrictions in case of overproduction. Deputy Prime Minister Alexander Novak also said that the domestic diesel market is currently balanced. November RBOB traded to a new contract high overnight but is close to taking out Thursday’s low, setting the market up for a potential reversal.
NATURAL GAS
November Natural Gas was back testing contract lows early Friday, as a mild forecast for the US over the next two weeks will keep heating demand down. The 6-10 and 8-14 day forecast show once again mostly above normal temperatures across the lower 48 states, with the exception of normal in the east-coast states. This will keep heating demand light until mid-month. El Nino has a tendency to bring mild weather to the lower 48, so demand expectations this winter are not running very high. Thursday’s EIA natural gas storage report came in right at expectations with a below-average build for this time of year, which did little to support the market.
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