Written Commentary
CRUDE OIL
October Crude Oil was lower overnight but held in the upper half of yesterday’s range. The market has calmed down a bit after the news yesterday that the eastern Libyan government was closing oil fields that are responsible for almost all of the country’s 1.17 million barrels per day of production. There has been no confirmation from the internationally recognized government in Tripoli or from the National Oil Corporation that the shutdown has occurred. The market also drew support yesterday after Israel and Hezbollah lobbed missiles at each other over the weekend, reigniting concerns that Israel-Hamas hostilities will expand into a wider war. The market may be taking some comfort from the possibility that Iran is to be holding back on its threats against Israel to see if cease-fire talks gain traction. For the US inventory reports this week, a Reuters survey has an average trade expectation crude oil stocks to show a 3.0 million-barrel decline last week, with gasoline expected to be down 1.6 million and distillates down 1.1 million. Refinery runs are expected to be up 0.3% to 92.6%.
PRODUCT MARKETS
Like crude oil, October RBOB and ULSD have backed off from their yesterday’s rallies, as the market has calmed down in the face of an apparent shutdown in Libyan oil production. The markets may be waiting for the weekly EIA report for the next move.
NATURAL GAS
October Natural Gas extended its recent losses overnight and fell to its lowest level since August 6. The market has given up most of its gains off the August 5 contract lows, as the reality of abundant US supply cannot be denied. For the EIA inventory report this week, a Reuters survey had an average trade expectation for an injection of 33-55 bcf for the week ending August 23. LSEG is estimating a 36 bcf increase, which would put total storage at 12.2% of the five-year average. LSEG is estimating last week’s US power plant demand at 43.1 billion cubic feet per day, down from 45.7 the previous week, and roughly 42% of total US consumption. They are forecasting this week’s demand at 43.5 bcfd. The 6-10 and 8-14 day forecasts show a mixture of above and below normal temperatures across the lower 48 states, with normal to below normal temps dominating the eastern half and above normal in the west.
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