Written Commentary
NATURAL GAS
October Natural Gas gapped lower overnight, giving back some of Friday’s gains. The 6-10 and 8-14 day forecasts show an expanding area of cooler than normal temperatures over the lower 48, which will limit cooling demand and likely keep US storage injections running ahead of normal. The Baker Hughes rig count showed US natural gas rigs in operation were down 1 rig to 122 last week. This was up from 98 rigs a year ago and above the five-year average of 108 This is down slightly from a 6 ½-year peak of 124 as of August 1. The US National Hurricane Center said another system in the Atlantic Ocean has a 50% chance of strengthening into a hurricane over the next week as it moves toward Puerto Rico. A storm could cut demand by shutting down LNG export plants and knocking out power. LSEG said average gas output in the lower 48 states has risen to 108.2 billion cubic feet per day so far in August, up from a record monthly high of 107.9 bcfd in July. The average amount of gas flowing to the eight big U.S.
CRUDE OIL
October Crude Oil is a little higher this morning, perhaps drawing support from comment by White House trade advisor Peter Navarro singling out India’s purchases of Russian crude oil in an article in the Financial Times, saying it had to stop. This counters some of what appear to be a more conciliatory tone towards Russia in the wake of last week’s meeting between Trump and Putin. Eyes will be on the meeting between President Trump and Ukrainian President Zelenskiy today to see what can be achieved towards a peace deal. They will be joined by European and NATO leaders, and there is some speculation that Putin may have agreed to allow protections for Ukraine that would be similar to what NATO would provide to a member country but without Ukraine being an official NATO member. A peace deal would be bearish, as it would ease sanctions on Russian crude oil sales. The Baker Hughes rig count showed US oil rigs in operation were up 1 rig to 412 last week.
PRODUCTS
Like Crude Oil, October RBOB found mild support overnight from Navarro’s comments signaling out India’s imports of Russian crude oil, which countered some of optimism that the talks between Presidents Trump and Zelenskiy today. Progress towards peace would be bearish for crude oil and therefore the products.
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