Written Commentary
CRUDE OIL
A damaging strike by the Houthis in Saudi Arabia over the weekend has tipped the crude oil market into a bullish posture early Monday despite a surprise announcement by President Trump on Sunday of an “energy ceasefire” agreement between Russia and Ukraine. The lack of confirmation from Russia on the agreement and reports of Russian attacks on Ukraine since the agreement was announced have fed skepticism about the plan’s viability and had traders wondering if the announcement was premature. The Houthis claimed responsibility for strikes on Riyadh’s international airport on Saturday that killed 13 people and wounded more than 300, and more attacks were report Sunday. This comes after attacks on tankers by Iran in the Strait of Hormuz last week, which sobered market bears who had taken encouragement from reports that Mideast crude exports in early October had reached their highest level since the US/Iran war began. In the US Gulf, Shell, Chevron and BP were preparing to redeploy personnel to their platforms after Hurricane Isaias made landfall over the weekend. The Baker Hughes rig count on Friday showed US oil rigs in operation were up 6 rigs to 462 last week. This was up from 422 rigs a year ago and below the five-year average of 487. This is the highest since May 23, 2025.
PRODUCTS
Product prices were up off their lows early Monday after skepticism emerged over the peace processes in Ukraine and Russia and the news of the Houthi attacks on Saudi Arabia over the weekend. President Trump’s announcement on Friday that Russia will immediately supply more than 2.25 million barrels of diesel to US and global markets pressured ULSD prices on Friday and initially sent prices lower on Monday. The legality of a deal reported last week for a group of US investors close to Trump to fund energy investment in Russia is being questioned by members of Congress, including Republicans. Trump’s announcement on Sunday that Ukraine and Russia had agreed to an energy ceasefire was also met with skepticism after the Ukrainian leader accused Russia of violating the ceasefire.
NATURAL GAS
Hurricane Isaias landed in the western Florida Panhandle over the weekend, which will allow the small amount of US production that occurs in the Gulf of Mexico to resume. The US Marine Minerals Administration said about 59% or 1.3 billion cubic feet per day (bcfd) of offshore Gulf of Mexico gas was shut in due to Isaias, but only about 2% of US marketed production come from the region. The trend towards lower production in the US overall has helped lift the market off its lows from earlier in the month. LSEG said average gas output in the US Lower 48 states are running around 111.0 bcfd this month versus the record 113.3 bcfd in August and September, due to forces majeure on various pipelines and to some degree from shutdowns from Hurricane Isais. Average gas flows to the nine major US LNG export plants have fallen to 17.1 bcfd so far in October, down from 18.0 bcfd in September. The Baker Hughes rig count showed US natural gas rigs in operation were down 1 rig to 132 last week. This was up from 118 rigs a year ago and above the five-year average of 119. The 6-10 day forecast shows normal to below normal temperature in the northeast, Great Lakes, southeast US and Texas but above normal elsewhere. The 8-10 shows above normal everywhere.
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