Written Commentary
CRUDE OIL
October Crude Oil gave back yesterday’s gains that came of heighten anxiety in the wake of Ukrainian attacks on Russian energy infrastructure over the weekend. The apparent stall in the peace talks between Russia and Ukraine have put the threat of heavy sanctions on Russian crude oil back on the table, but unofficial reports that US and Russian government officials discussed several energy deals on the sidelines of this month’s negotiations appear to mitigate some of these threats. There might also be a risk-off mood developing following a modest decline in equity markets overnight and uncertainty of over Trump’s “firing” of a Fed governor. The deals that US and Russian official purportedly discussed included the possibility of Exxon Mobil re-entering Russia’s Sakhalin-1 oil and gas project and the prospect of Russia purchasing U.S. equipment for its LNG projects.
NATURAL GAS
October Natural Gas was higher overnight after falling to its lowest level since September 2021 on the open yesterday and the nearby contract falling to its lowest level since November. The market has been under pressure from an above average pace of weekly injections this summer and US production outpacing demand.
The latest 6-10 day forecast has normal or below normal temperatures across most of the lower 48, which will continue to keep cooling demand on the light side. LSEG said average gas output in the Lower 48 states has risen to 108.5 billion cubic feet per day so far in August, up from a record 107.8 bcfd in July. The average amount of gas flowing to the eight big U.S. LNG export plants has risen to 15.9 bcfd this month, up from 15.6 bcfd in July and approaching the record 16.0 bcfd in April.
PRODUCTS
Like crude oil, the products are under pressure today and have given back yesterday’s gains.
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