Written Commentary
CRUDE OIL
October Crude oil is lower this morning but inside the upper end of yesterday’s range. The market drew support this week from an impressive draw in US crude oil stocks, but traders were also quick to point out that the drop in refinery runs underscores that the end of the summer driving season. Russia is stepping up its attacks on Ukraine, which provides some sort of bid under the market, but so far the tariff threats do not seem to be limiting the availability of Russian supply to its main buyers. India back buying Russian crude oil despite the 50% tariffs placed on Indian imports into the US because of their purchases of Russian oil. India had suspended their purchases during negotiations over the tariff rates, but once the tariffs were in place they seemed to resume their purchases. Trade sources told Reuters that Indian refiners did increase their purchased of US crude oil this month, drawn by competitive prices.
NATURAL GAS
October Natural Gas rallied to its highest level in two weeks yesterday after the weekly EIA Gas Storage report showed a smaller build than expected for the week ending August 22. Storage came in at 3,217 bcf, +18 bcf from the previous week versus an average trade expectation of +26 and a range of expectations from +19 to +38. The five-year average change for this week is +40. Storage was -3.5% from a year ago and +4.7% from five-year average versus -3.0% and +5.5% the previous week. This was the third time in four weeks that the supply build was below the five year average. Cooling demand has been kept to a minimum as temperatures have been running at or below normal for several days across most of the eastern two-thirds of the lower 48, while areas west of the Rockies have been seeing above normal temperatures, and this pattern is expected to continue over the next 6-14 days. LSEG also said average gas output in the Lower 48 states had risen to 108.5 bcfd in August, up from a record 107.8 bcfd in July.
PRODUCTS
End of summer driving season approaches, but the market is also transitioning to a period of higher diesel demand for harvest and heating.
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