Written Commentary
CRUDE OIL
November Crude Oil is near unchanged this morning but in the bottom part of yesterday’s range down action. Two OPEC+ sources yesterday downplayed the implications of a Financial Times story that Saudi Arabia was dropping its unofficial $100 price target in order to win back market share. Sources told Reuters that the group plans to go ahead with oil production increases in December but that it first needs to cut address overproduction by some members. OPEC+ is scheduled to raise production by 180,000 barrels per day in December as part of its planned easing of quotas. China’s stimulus moves this week proved underwhelming, but more fiscal measures could be announced before the Chinese holidays that begin on October 1. Chevron has restored production at its Gulf facilities with the passing of Hurricane Helene. The market quickly discounted what appeared to be a bullish EIA report on Wednesday, focusing instead on the implications of the increased OPEC+ production and a still-dismal outlook for Chinese consumption. Mideast tensions remain high with Israel possibly on the cusp of invading Lebanon.
NATURAL GAS
November Natural Gas declined yesterday despite a bullish EIA storage report. The market’s failure to push break above the 100-day moving average after three days of trying sparked some technical selling. However, the market bounced off the 9-day overnight, and this may be enough to encourage another attempt to push above the 100-day. Yesterday’s EIA report showed US gas storage for the week ending September 20 increasing by 47 bcf from the previous week to 3,492 bcf versus trade expectations calling for an increase of 53 to 57 bcf. This was the smallest increase for this point in the season in at least five years. Storage was up 4.0% from a year ago and 7.1% above the five-year average versus +5.4% and +8.6% the previous week. The surplus continues to narrow, which is a bullish trend. The NWS calls 6-10 and 8-14 day forecasts show above normal temperatures across most of the lower 48, except for a corner of the PNW and parts of the Appalachians and mid-Atlantic states. Much above normal temps are expected in the western half.
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