Written Commentary
CRUDE OIL
November Crude Oil was lower early Tuesday on new optimism regarding a potential reopening of the Strait of Hormuz. Iran has apparently offered to reopen the strait within seven days if the United States takes initial steps toward easing military pressure, including an end to the US blockade of Iranian ports. The proposal also calls for renewed talks aimed at reaching a permanent end to hostilities. The new initiative has reportedly been approved by Supreme Leader Mojtaba Khamenei and the Supreme National Security Council, and this raises hope that extremist in Iran won’t quash the attempt at peace. However, for this to work, the US would likely have to accept less than it wants.
PRODUCTS
Product prices were mixed early Tuesday; both RBOB and ULSD fell below Monday’s lows, but RBPB was back above Monday’s close as the session progressed. The markets were under pressure on the reports that Iran offered to reopen the Strait of Hormuz if the US ends the blockade. If the strait does reopen, it would have a much more immediate effect on global crude supply, but it would eventually ease tight diesel and gasoline supplies as well.
NATURAL GAS
November Natural Gas was near unchanged early Tuesday, inside Monday’s range, as the market continued its narrow consolidation. The latest 6-10 and 8-14 day forecasts show above normal temperatures across the lower 48 states, which at this time of year may be described as “mild,” especially in the north. This suggest a slower than normal startup to the heating season.
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