Written Commentary
NATURAL GAS
After falling 18% in three sessions, natural gas prices appear to have found their footing. The November contract made a sharp turnaround yesterday and climbed into positive territory before finishing with a minimal loss, but it found additional support overnight. The latest 6-10 and 8-14-day forecasts call for above normal temperatures across the western two-thirds of the US, which could bring an increase in “off-season” air conditioning and power plant demand. After a slight pullback this week, US production is expected to climb back above 99 bcf per day, and with diminished LNG export capacity, the weekly storage report is likely to show a significant increase. With US production back near record highs, the market may have trouble sustaining upside momentum. Near-term resistance for November natural gas is at $8.120 with support at $7.620.
CRUDE OIL
November crude oil had a big turnaround from heavy early losses yesterday and finished with a moderate gain and a positive daily reversal, but there are enough bearish factors that could keep further gains in check. Reports that OPEC Plus nations were underproducing their quota by more than 3.5 million barrels per day was a supportive factor yesterday, as was a report in a major financial publication that seemed to reduce the chances for a 100-basis point Fed rate hike this week, quelling some of the anxiety in the market. However, reports today that oil exports from Iraq’s Basra terminal had resumed after a previous spill and that India’s crude imports in August were down 13% from July may keep further gains in check. The White House said it would allow for 10 million barrels of SPR crude oil to be sold in November. The Reuters survey had a median forecast for US crude oil stocks to show an increase of 2.3 million barrels in this week’s EIA report.
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