Written Commentary
CRUDE OIL
December Crude Oil was higher overnight after OPEC+ said it would raise production in by 137,000 barrels per day (bpd) in November, the same as their increase in October. This is after the market sold off last week on expectations for a bigger increase. Saudi Arabia also left the official selling price of its flagship Arab Light crude to Asia unchanged after sources told Reuters last week they were expecting an increase of 20-40 cents per barrel. Chinese stockpiling of oil is viewed as a supportive element in the face of higher production out of OPEC, the resumption of Venezuelan exports, and the opening of the pipeline from Kurdistan to Turkey. The Baker Hughes rig count on Friday showed US oil rigs in operation were down 2 last week to 422. This was down from 479 rigs a year ago and below the five-year average of 440. Exports from Turkey’s Ceyhan port were temporarily halted late last week because storage tanks had reached capacity, but they resumed on Friday.
NATURAL GAS
November Natural Gas opened lower overnight but is back in positive territory this morning. The 6-10 and 8-14 day forecasts call for above normal temperatures from the Rockies to the East Coast and normal/below normal westward. EIA Gas storage increased lest than expected last week, and some are viewing this as evidence that the cooling demand brought on by the unusually warm weather is slowing the seasonal build, even if it means less cooling demand. Last week’s supply was +53 bcf versus a five-year average change for this week at +87. Storage was up 0.4% from a year ago and 4.6% above the five-year average. Also contributing to the slower build is lower US output. LSEG said average gas output in the Lower 48 states averaged 106.4 billion cubic feet per day (bcfd) so far in October, down from 107.4 bcfd in September and a record 108.3 bcfd in August.
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