Written Commentary
CRUDE OIL
September Crude Oil fell to its lowest level since June 10 overnight, extending yesterday’s losses slightly. The mood has been bearish since the market reached a 2 ½ month high early this month, as the trade has focused on disappointing demand indicators from China. Tensions in the Middle East eased yesterday when the Israeli government signaled that its response to a rocket attack on the Golan Heights over the weekend would be calculated to avoid expanding the war. The Chinese government says it intends to take steps to boost growth, but the trade remains skeptical that they will make any significant changes. OPEC+ ministers are meeting Thursday to discuss among other things the plan to unwind the current production cuts. No changes are expected from the meeting. Reported declines in Saudi GDP due to lower crude exports may make them reluctant to extend the cuts despite the lower price trend. For the US inventory reports this week, a Reuters survey shows an average trade expectation for US crude oil stocks to show a decline of 2.3 million barrels last week, with gasoline stocks down 1.4 million and distillates down 1.5 million. Refinery utilization is expected to be up 0.4% to 92%. Last week’s report came in at the bullish end of expectations, which sparked a brief rally and some significant volatility.
PRODUCT MARKETS
September RBOB extended its selloff overnight, and it too closed below the 200-day moving average. This was the second time this has happened since June 14.
NATURAL GAS
September Natural Gas moved to another new contract low overnight, as ample US supply and a hot summer weather is being tempered by occasional rainfall in the central part of the nation, limiting cooling demand. For the EIA report later this week, the trade is looking for an increase of 27-45 billion cubic feet last week. Last week’s report showed US supply was running 8.4% ahead of a year ago and 16.4% ahead of the 5-year average. The 6-10-day forecast shows above normal temperatures across the Lower 48 with some moderation in the 8-14 day and cooler than normal in the northern Plains, northern Wisconsin and Michigan, and northern New England.
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