Written Commentary
CRUDE OIL
November Crude Oil was higher overnight but inside Friday’s range, drawing support from news that a Ukraine drone attack hit the Kirishi oil refinery in northwest Russia overnight sparked a fire there. Ukraine is targeting Russian oil infrastructure, which keeps the threat to Russian oil supply in the news. Ukrainian President Zelenskiy stated that the most effective sanctions – the sanctions that work the fastest – are firing on Russian oil plants, on their terminals, on their oil depots. Kirishi refines about 17.7 million metric tons per year (355,000 barrels per day) of Russian crude, or 6.4% of the country’s total. Trump said on Saturday the US is prepared to impose fresh energy sanctions on Russia but conditioned that on NATO nations stopping their purchases of Russian oil among other measured, but with the EU sticking to its plans to phase out Russian oil and gas imports by 2028, seem to leave issue of additional sanctions off the table for the moment. The trade will be watching the trade negotiation between the US and China this week, as a positive result could improve attitudes towards oil consumption. China’s crude oil throughput in August rose 7.6% from a year earlier, processing about 14.94 million barrels per day (bpd), the second highest in the last 17 months but 1.3% lower than June. January-August throughput was 14.7 million bpd, up 3.2% from the same period last year. The Baker Hughes rig count showed US oil rigs in operation were up 2 last week to 416. This was down from 488 rigs a year ago and below the five-year average of 439.
NATURAL GAS
November Natural Gas made extended last week’s selloff very slightly. The 6-10 and 8-14 day forecasts call for above and much above normal temperatures over most of the US, which could provided some late season cooling demand, which could improve overall demand numbers from last week. LSEG projected average gas demand in the Lower 48 states, including exports, would rise to 102.6 bcfd this week from 101. However, the warm temperatures will also delay the more natural-gas energy heating consumption in the north. China’s natural gas production increased 5.9% year on year to 21.2 billion cubic meters in August, with output from January to August rising 6.1% to 173.7 billion cubic meters, according to data from the National Bureau of Statistics. LSEG said average gas output in the Lower 48 states fell to 107.4 billion cubic feet per day so far in September, down from a record monthly high of 108.3 bcfd in August. The average amount of gas flowing to the eight big US LNG export plants have fallen to 15.5 bcfd so far in September from 15.8 bcfd in August. The Baker Hughes rig count showed US natural gas rigs in operation were unchanged at 118 rigs last week. This was up from 97 rigs a year ago and above the five-year average of 110.
PRODUCTS
In ULSD, managed money traders were net sellers of 13,240 contracts, reducing their net long to 25,805, towards the middle of the historic range.
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