Written Commentary
CRUDE OIL
November Crude Oil is higher this morning and has even penetrated the 200-day moving average for the first time since September 3. President Trump’s statement yesterday that he believed Ukraine could retake all the territory captured by Russia may have raised some expectations that the US and NATO would step up their support for Ukraine, though there is a great deal of uncertainty over what it means. Ukrainian drone strikes have been surprisingly effective at damaging Russian oil infrastructure and at times supported the oil market. Reports that Chevron will only be able to export about 50% of the 240,000 barrels per day in produces in its joint ventures in Venezuela given the latest rules laid out by Washington was also supportive, as this the type of crude oil that many Gulf refineries are designed to use. Last night’s API report was bullish against expectations for crude oil and gasoline and bearish for diesel. The report showed US crude stocks were down 3.82 million barrels last week versus expectations from a Reuters poll calling for +200,000.
NATURAL GAS
Once again the 6-10 and 8-14 day forecasts are calling for above normal temperatures across most of the lower 48-states, which means the warm temperatures are now forecast out through October 7. Each day the forecast doesn’t change means one more day the heating season is delayed. It also mean an extension of the cooling season the south, but on the whole we use more natural gas to heat our homes, and the northern states will not be using much at all in the next couple of weeks. This morning’s forecast might be a little less bearish than yesterday in that the cooler than normal temps that had emerged in the southwestern US forecast have now disappeared. LSEG has projected average gas demand in the lower 48 states, including exports, to fall from 103.5 billion cubic feet per day this week to 101.2 bcfd next week. For the EIA natural gas storage report this week, the early Reuters poll has a range of expectations calling for US storage to be +68 to +77 for the week ending September 19.
PRODUCTS
Above normal temperatures in the forecast for most of the US lower 48 states will delay the start of the heating season and put pressure on ULSD demand. Last night’s API report was bullish against expectations for gasoline and bearish for diesel. The report showed US gasoline stocks were down 1.05 million barrels versus +200,000 expected, and distillates were up 518,000 barrels versus -500,000 expected. The EIA report is out today.
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