Written Commentary
CRUDE OIL
September Crude Oil extended Monday’s declines early Tuesday, as the pause in hostilities between the US and Iran extended for a third day and optimism about a possible negotiated settlement grew. It also appears that traffic out of the Red Sea is increasing despite threats by the Houthis, with 28 vessels reportedly passing through Bab el-Mandeb Monday, a four-day high. President Trump said on Monday that negotiations with Iran were progressing and could lead to a resolution, but he also warned that military action could restart if the talks collapsed. Iran had similar comments.
PRODUCTS
Unlike crude oil, the products did not extend their losses overnight. Crack spreads continue to push to new highs because the US and other parts of the world cannot refine fast enough. On top of the reduction of oil flows out of the Middle East, refineries in the Persian Gulf have been damaged and in Russia have been under attack this year. US exports have surged, and US gasoline and distillate supplies are near the lowest they have been for this point in the season in at least six years.
NATURAL GAS
September Natural Gas extended its selloff early Tuesday and fell to its lowest level since August 2021. The nearby contract has fallen to its lowest level since May. US production is back to all time highs this month. LSEG said average gas output in the lower 48 states has risen to 110.6 billion cubic feet per day, up from 110.0 bcfd in June and in line with the record 110.6 bcfd from December 2025. They also reported estimates of a daily record high of 112.3 bcfd on Sunday, topping 112.2 bcfd on Saturday and 112.1 bcfd on December 21.
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