Written Commentary
CRUDE OIL
November Crude Oil was higher yesterday on reports that Israel had bombed a Hamas holding in Qatar, but it eased back after the US assured Qatar that this would not happen again. The EIA Short Term Energy Outlook released yesterday called for oil prices to drop significantly in the months ahead as rising OPEC+ production will lead to large oil inventory builds. The API report yesterday afternoon leaned bearish, but crude oil and the products were able to discount the numbers. API crude oil stocks were +1.25 million barrels for the week ending September 5 versus trade expectations of -1.0 million. Distillates were +1.5 million versus +400,000 expected, and gasoline stocks were +329,000 versus -200,000 expected. The EIA report this morning will have the “final” word, and in addition to the expectations listed above, refinery runs are expected to be -0.6% to 93.7%. Speaking at her state of the union address, European Commission chief Ursula von der Leyen said today that EU is considering a faster phase-out of Russian fossil fuels as part of new sanctions against Moscow. EU officials are currently in Washington to discuss coordination on new Russia sanctions with the Trump administration.
NATURAL GAS
November Natural Gas fell to its lowest level since September 2 overnight, and for the moment the short covering off a deeply oversold condition appears to have played itself out. The 6-10 and 8-14 day forecasts call for above and much above normal temperatures across most of the lower 48 states, including the Midwest and upper Plains. On the whole this seems more bearish than bullish, as it would slow heating demand at a time when it normally starts to kick in. Early expectations called for tomorrow’s EIA to show storage +60 to +80 bcf last week versus a five year average change for the week of +59 bcf. A report from the International Gas Union’s Global overnight said global natural gas demand will rise at a slower pace in 2025 than in 2024.
PRODUCTS
API distillates stocks were +1.5 million last week versus expectations calling for +400,000, and gasoline stocks were +329,000 versus -200,000 expected.
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