Written Commentary
CRUDE OIL
November Crude Oil is lower this morning following a rally yesterday off war concerns after Israel bombed Hamas leaders in Qatar and Russian drones moved into in Poland, raising the possibility of a NATO response. Neither of these events provided lasting support to prices after weekly EIA data came in bearish, with crude oil and gasoline stocks increasing last week versus expectations for declines and distillate stocks increasing more than expected. Crude oil stocks are above year-ago and 4-year average levels. Distillate stocks continue their march higher. Refinery runs are down off their peak of 96.9% from August 1, but they are still the highest they have been for this point in the season in at least six years. Overnight, the IEA released its latest forecast on the global oil balance, and in it they raised the global surplus for 2025. They are forecasting global oil supply to increase by 2.7 million barrels per day (bpd) in 2025, up from a previous forecast of +2.5. IEA’s demand forecasts are at the lower end of the industry range. OPEC, which sees demand rising by more than the IEA, will update its forecasts today.
NATURAL GAS
The latest 6-10 and 8-14 day forecasts call for above or much above normal temperatures across the lower 48, which will reduce heating demand. LSEG said average gas output in the Lower 48 states fell to 107.4 billion cubic feet per day so far in September, down from a record 108.3 bcfd in August, and they also projected average gas demand, including exports, to rise from 101.0 bcfd this week to 103.0 bcfd next week. The average amount of gas flowing to the eight big US LNG export plants has fallen to 15.6 bcfd so far in September, down from 15.8 bcfd in August and below the record high of 16.0 bcfd from April. A Reuters poll has an average expectation for today’s EIA report to show storage +70 bcf (range +62 to +80) for the week ending September 5 versus a five year average change of +59 bcf for that week.
PRODUCTS
EIA Gasoline stocks were up +1.5 million barrels last week versus -0.2 million expected and distillate stocks were +4.7 million barrels vs +0.4 million expected. Implied gasoline demand was 8.508 million barrels per day vs 9.117 million the previous week and 8.478 million a year ago.
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