Written Commentary
CRUDE OIL
November Crude Oil was lower early Friday on word of some progress in negations between the US and Iran, with talk of a “phased” end to the war, with Iran allowing passage through the Strait of Hormuz in return for the US lifting its economic blockade and potentially unfreezing assets. There are also suggestions that Iran may be willing to take its demand for transit fees out of the main agreement and putting it in a side attachment. However, observers say neither side wants to be the first to surrender its leverage. Saudi, Turkish and Pakistani military chiefs are to meet to discuss how to support Saudi Arabia under a joint defense pact. Saudi Arabia intercepted six ballistic missiles fired by the Houthis on Thursday. Industry sources say Saudi Arabia is building up volumes through its East-West pipeline that it restarted this week. The cost of insuring an oil tanker loaded from Saudi Arabia’s main Red Sea port has tripled in recent weeks.
PRODUCTS
RBOB and ULSD were on the defensive early Friday, as the proposed diesel export ban slipped from the headlines. New hopes of a negotiated settlement between the US and Iran may have also undercut these markets. November RBOB backed off from Thursday’s contract high, as longs may not have been willing to risk a potential breakthrough in negotiations going into the weekend. November ULSD fell to its lowest level since September 8.
NATURAL GAS
November Natural Gas was lower early Friday but within Thursday’s breakout rally to its highest level since the end of June. Bloomberg on Thursday reported that a major pipeline in Appalachia sent out a force majeure notice to customers, indicating a need for “an immediate pressure reduction” on a portion of the line. The estimated impact was 1.8 billion cubic feet per day, and this news appeared to spark a wave of short covering in the futures. Thursday’s EIA report showed a net injection of 53 billion cubic feet last week, which was right at the average trade expectation and well below five-year average change for this week at +77
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