Written Commentary
NATURAL GAS
The natural gas market continues to be very difficult to predict, the market continues to coil in a tight range with the markets embracing oversupply and merely consistent demand. With the Russian national gas company continuing to push normal amounts of gas through Ukraine and Mild European weather there should be overhead fundamental resistance. Last week, the Baker Hughes oil rig drilling data showed oil and gas rigs declining for a 3rd quarter in a row with the rigs operating reaching the lowest level since February 2022.
CRUDE OIL
While crude oil prices are higher early today and press coverage suggests the “global tight supply situation” theme will continue to lift prices we see the retrenchment off last week’s spike high combined with disappointing Chinese manufacturing data signaling an interim top. In fact, with the disappointing Chinese data overnight joined by evidence that Asian crude oil imports last month declined for a second straight month the tight supply situation is showing signs of moderating. In another minimally supportive overnight development weekly crude oil in floating storage declined by 11% versus last week with storage falling in every major region reported. In fact, the Russian government indicated it was poised to implement measures to combat surging fuel prices in the country continue to rise. Reportedly Russian diesel exports will not be allowed throughout October. However, the tightness theme is not supported by supply conditions in the US and with the Chinese on holiday a reduction in diesel use for commercial activity could temper last week’s attempt to recover.
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