Written Commentary
CRUDE OIL
October Crude Oil was sharply low overnight as concerns over demand from China apparently outweighed the interruptions to oil production in Libya. Chinese PMI in August at 50.4 beat trade expectations calling for 50.0 and was better than the 49.8 registered in July, but the trade apparently focused on a decline in new export orders, the first in eight months. Oil exports at major Libyan ports were reportedly halted on Monday, and production was curtailed across the country amid a standoff between rival political factions over control of the central bank and oil revenue. Libya’s oil production has fallen by more than half since the standoff began last week, when western factions moved to oust veteran Central Bank of Libya Governor Sadiq al-Kabir and replace him with a rival. The National Oil Corporation said on Thursday that total production had plunged to just over 591,000 barrels per day from nearly 959,000 on August 26. The July average was 1.18 million bpd, according to OPEC. OPEC oil output in August is estimated at 26.36 million bpd, down 340,000 from July and the lowest since January. Iraq lowered its exports in August in an attempt to comply with its quota after exceeding it in July. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 7,918 contracts of crude oil for the week ending August 27, increasing their net long to 186,527.
PRODUCT MARKETS
Friday’s Commitments of Traders Report showed managed money traders were net buyers of 697 contracts of RBOB for the week ending August 27, increasing their net long to 17,579. This is near the low end of the historic range for net longs. However, the gasoline market is under pressure today from weakness in the crude oil complex.
NATURAL GAS
October Natural Gas is near unchanged this morning after trading to its highest level since August 23 overnight. The market ran up against resistance at the 21-day moving average and the 50% retracement of the selloff from the August 15 high to last week’s low. The 6-10 and 8-14 day forecasts call for above to much above normal temperatures in the western half of the lower 48 but mostly normal to below normal in the east. Gas prices in Europe were lower today. US gas storage levels are still running ahead of year ago and five-year average levels, but the gaps are narrowing. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 30,426 contracts of natural gas for the week ending August 27, increasing their net short to 70,707.
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