Written Commentary
CRUDE OIL
December Crude Oil is slightly higher this morning but inside the range form this week. President Trump said yesterday that Indian Prime Minister Narendra Modi had assured him that India will not be buying oil from Russia. Sources told Reuters that some Indian refiners are preparing to shift away from Russian oil, with a drop in purchases possible starting in December. However, refiners have not been formally told by the government to stop buying Russian oil. Indian officials are in Washington for trade talks. If India does agree to suspend its purchase, it could make the OPEC+ production increases less bearish. However, the government shutdown and political turmoil in the US could lower demand. The API report came in bearish for crude and gasoline and bullish for diesel, with sources telling Reuters that crude oil stocks were +7.36 million barrels last week versus an average trade expectation calling for +300,000.
NATURAL GAS
For the EIA gas storage report today, the Reuters poll has an average expectation calling a net injection of 81 billion cubic feet for the week ending October 10 (range +75 to +88). The five-year average change for the week is +82 bcf. The latest 6-10 and 8-14 day forecasts are looking a little more bearish than yesterday, with the warmer than normal temperatures sticking around the eastern two-thirds half of the US and spreading westward. The below normal temps in the west have disappeared. LSEG said average gas output in the Lower 48 states fell to 106.5 billion cubic feet per day so far in October, down from 107.4 bcfd in September and the record 108.0 bcfd in August.
PRODUCTS
The API report came in bearish for gasoline and bullish for diesel, with sources telling Reuters that gasoline stocks were +2.99 million barrels last week versus -100,000 expected and distillates -4.79 million versus -300,000 expected. The EIA report will be released at 11:00 AM central today. Bloomberg estimates that Russian exports of refined fuels have slumped to their lowest since the onset of the Ukraine war in the wake of the drone attacks on their refining infrastructure. The declining shipments suggest some level of success in Ukraine’s campaign to cripple the oil industry that helps fund Moscow’s war machine. Russian refinery runs remain below 5 million barrels a day, the lowest level since spring 2022.
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