Written Commentary
CRUDE OIL
December Crude Oil was slightly lower at time overnight on reports that a cease-fire deal had been reached between Israel and Hamas. The fighting has not directly affected crude oil supply, but if peace breaks out, it could lead to less strain on oil flows, especially if it reduces Houthi attacks on the Red Sea shipping. Egyptian media said the deal had officially come into effect up its signing. Israeli Prime Minister Benjamin Netanyahu’s office said it would take effect only once ratified by the Israeli cabinet, which was scheduled to meet later on Thursday. Under the deal, fighting will cease, Israel will partially withdraw from Gaza and Hamas will free hostages it captured in the attack that precipitated the war in exchange for prisoners held by Israel. The Russian Deputy Prime Minister said yesterday that the nation has been gradually increasing its oil production and was close to meeting its OPEC+ output quota. Bloomberg said their data indicated Russia’s September output totaled 9.368 million barrels per day, up 193,000 bpd from August but still about 47,000 below their quota. The Ukrainian drone attacks on Russia’s refineries have cut crude processing and led to a surge in exports of crude oil but has also tightened supplies of gasoline and diesel. Like the API report, the EIA report yesterday came in at the bearish end of expectations for crude oil and bullish for gasoline and diesel for the week ending October 3.
NATURAL GAS
November Natural Gas fell to its lowest level this month overnight but was back higher this morning. The latest 6-10 and 8-14 day forecasts still show above normal temps across the nation’s mid-section, but it allows for normal and below normal temps to reach in from the east as well as the west, which is a less bearish than yesterday at this time as it implies an improvement in heating demand. LSEG said average gas output in the Lower 48 states have fallen to 106.4 billion cubic feet per day so far in October, down from 107.4 bcfd in September and below the record 108.0 in August. They also said the average amount of gas flowing to the eight big US LNG export plants has risen to 16.1 bcfd so far this month, up from 15.7 bcfd in September and above the record 16.0 bcfd from April.
PRODUCTS
The EIA report yesterday came in at the bullish end of expectations for gasoline and diesel for the week ending October 3. This was despite the fact that refinery activity increased 1% last week. Implied gasoline demand was above the previous week but behind a year ago, and implied distillate demand was above the previous week and above a year ago. Ukrainian President Zelinsky said that the drone strikes on Russian energy facilities may have reduced gasoline supplies in Russia by up to 20%.
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