Written Commentary
CRUDE OIL
December Crude Oil reached a new contract high early Friday as ongoing hostilities in the Middle East have kept supply anxiety elevated. Saudi Aramco has evacuated its headquarters in Dhahran, a city on the Persian Gulf in the wake of attacks by the Houthis. Outreach by mediators from Pakistan this week to restart negotiations for peace between the US and Iran seemed to go nowhere. Reports of a meeting with US Special Envoy Steve Witkoff and Russian President Putin this were also discounted quickly. US crude, gasoline, and distillate stocks are all running below year ago and five-year average levels.
PRODUCTS
It possible that the mild weather in the US is keep heating oil buyers in the northeast reluctant to commit. Gasoline demand has already passed its peak season. On the other hand the various attempts by the Trump administration to bring down diesel prices are viewed as helping only on the margins. The amounts coming from Russia are just not big enough, and allowing more red-dyed diesel to be used for non-agricultural use is proving complicated to implement. US refineries are already stretched pretty thin.
NATURAL GAS
Mild weather in the US is keeping heating demand light, and the forecasts show more of that over the next couple of weeks, with the 6-10 and 8-14-day maps showing above normal temperatures from the Great Plains to the East Coast. US production appears to be recovering from the setbacks from pipeline problems earlier in the month. LSEG said average gas output in the US Lower 48 states are averaging around 111.6 bcfd so far of October, but the flows have averaged around 113.3 bcfd this week, which matches the record levels from August and September.
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