Written Commentary
CRUDE OIL
November Crude Oil was slightly lower early Monday but inside Friday’s range. According to Reuters, shipping data from Kpler and Vortexa indicated that Middle East oil exports exceeded pre-war levels in September. The seven-day moving average was 18.3 million bpd on September 30 versus 18 million bpd average in the 12 months leading up to the war, with Saudi loadings leading the way. In addition, Saudi Arabia cut its oil prices for sale to Asia for November to $5 a barrel below the average of Oman and Dubai prices, down $3 from October and the widest discount since June 2020. The G-7 countries agreed on Friday to release 100 million barrels of diesel and crude oil from emergency reserves and pledged to refrain from energy export restrictions. In return President Trump said that the US would not impose a diesel export ban.
PRODUCTS
Product prices were mixed early Monday, with RBOB a little lower and ULSD higher, but neither market had moved out of Friday’s range. The agreement by the G-7 countries to release 100 million barrels of diesel and crude oil from emergency reserves and their pledge to refrain from energy export restrictions as well as US not banning diesel exports add a level of calm. At least US gasoline production will not get tied up in a lack of storage. The jump in Mideast crude exports and lower offered prices to Asia will help loosen up product supplies down the road.
NATURAL GAS
November Natural Gas bounced higher on Friday after testing contract lows and was hovering around the upper end of Friday’s range early Monday. US production appears to be starting out October at a lower rate, with LSEG putting average output in the lower 48 states 112.2 billion cubic feet per day (bcfd) as of October 3, down from the record 113.3 both August and September. The 6-10 and 8-14 day forecasts show above normal temperatures over most of the US lower 48 states except for some near normal in the PNW in the 6-10 day and the northern Plains/northern Midwest in the 8-14. This will keep heating demand low.
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