Written Commentary
CRUDE OIL
December Crude Oil is lower today as the support from the US sanctions on Russian Oil companies fades. Even OPEC+’s decision over the weekend to pause output hikes in the first quarter of next year has taken on a bearish spin as it is viewed as a reflection of reduced demand expectations. It was not surprising to hear that Russia lobbied for the pause because it would struggle to increase exports, but news that Saudi Arabia was fine with it suggests that they are less optimistic about prices. Poor manufacturing PMIs from Asia and the US yesterday also cast doubts on oil demand, and the nearby dollar reaching its highest level since July this week is another source of pressure on commodity prices. A vessel under European Union sanctions reportedly is discharging Russian naphtha at a western India port operated by the Adani group, the first such instance since the conglomerate barred blacklisted vessels from its terminals in September. However, Chinese oil refiners are reportedly shunning Russian shipments.
PRODUCTS
A major fuel supplier in Turkey has told its wholesale customers that it will raise diesel prices after Western sanctions on Russian oil companies led to supply issues and increased insurance and financing costs. December RBOB is holding inside yesterday’s range after trading to its highest level since September 29 yesterday.
NATURAL GAS
December Natural Gas is holding inside yesterday’s breakout range this morning. The 6-10 day forecast has below normal temperatures from the central Midwest to the east coast and above normal from the Plains westward. The below normal areas shrink in the 8-14 day, but the introduction of some cooler weather should provide a modest boost to heating demand. The strong pace of US LNG exports seems to be capturing more of the market’s attention. For the first few days of November, LSEG estimates the average amount of gas flowing to the eight big US LNG export plants has risen to 17.2 billion cubic feet per day, up from the record 16.6 bcfd from October. The US exported a record 10.1 million metric tons in October, up from a revised figure of 9.1 million in September. Europe imported 6.9 million tons in October, nearly 69% of total US exports.
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