Written Commentary
CRUDE OIL
November Crude Oil is lower this morning after trading to its higher level since July 19 overnight. At the overnight high, the market had rallied $12.13 in five sessions off the recent escalation in hostility in the Middle East, which may have been too far, too fast. The market had been bid higher on fears of an Israeli attack on Iranian oil infrastructure, but some are skeptical. Adding to the negative sentiment today is a selloff in Hong Kong equities on skepticism about China’s latest fiscal stimulus plans. Slow Asian demand has been the primary offset to Mideast concerns this year. Libya’s National Oil Company said daily crude oil and condensate production reached 1.133 million barrels per day in the last 24 hours and was expected to return to pre-closure levels of around 1.2 mbpd within the next few days. At least one oil platform in the Gulf of Mexico has been shut due to Hurricane Milton, but most of the energy infrastructure is expected to be out of its path. For the weekly US inventory reports this week, early expectations call for a 1.9 million-barrel increase in crude oil stocks, with gasoline expected to be down 1.5 million and distillates down 2.3 million. Refinery runs are expected to be down 0.1% to 87.5%.
NATURAL GAS
November Natural Gas was inside yesterday’s range down overnight. The market is under the influence of an outside day lower from Friday. Most of the US Gulf energy infrastructure is expected to be out of the path of Hurricane Milton, including LNG facilities. The strength of the storm increases the chance of power outages that could lower natural gas consumption, perhaps for several days. For the US storage report this week, traders are looking for an injection of 66 to 77 bcf. The five-year average injection for this week is 98 bcf. The 6-10 and 8-14 day forecasts show above normal temperatures across most of the US, which is a mixed bag during shoulder season, as it implies stronger cooling demand in the south but lower heating demand in the north.
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