Written Commentary
CRUDE OIL
October Crude Oil is finding its way this morning after OPEC+ agreed to a smaller increase in production than some had expected at their meeting yesterday. The group will ease its production restrictions by 137,000 barrels per day for October, smaller than the monthly increases of about 555,000 bpd for September and August and 411,000 bpd for July and June. This means that they have begun to unwind a second tranche of cuts of about 1.65 million bpd more than a year ahead of schedule. The group has already fully unwound the first tranche of 2.5 million bpd since April. However, OPEC+ production has not grown as quickly as the quotas have been lifted, due to limited capacity for some and the fact that some members were already producing above quota before the restrictions were eased. It does point to Saudi Arabia’s desire to regain market share, while at the same time complying with President Trump’s request to keep oil flowing. President Trump said he is ready to move to a second phase of sanctioning Russian oil sales, and Treasury Secretary Bessent said on Sunday that the US and the European Union could heap “secondary tariffs” on the countries that buy Russian oil. China’s crude oil imports rose 0.8% in August from a year earlier as both state-owned and independent refineries maintained high operating rates. Total crude oil imports from January to August stood at 376.05 million metric tons, or 11.3 million bpd, up 2.5% from the same period last year, according to official customs data.
NATURAL GAS
October Natural Gas extended its recent recovery rally overnight to trade to its highest level since October 8. The market has shunted aside last week’s EIA storage report that showed a larger than normal injection. A warming trend in the lower 48 states over the next two weeks could bring some late season cooling demand in the south. On the other hand, people in the north may leave their furnaces off.
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