Written Commentary
CRUDE OIL
November Crude Oil was under pressure early Monday, falling to its lowest level since September 10. The selloff is notable in the face of Iran and the US exchanging more threats over the weekend and reports of Houthi missile and drone strikes on the Saudi capital of Riyadh. With Iran’s President Pezeshkian is expected in New York this week for the United Nations General Assembly and President Trump saying would be open to meeting him, the market may be hoping for diplomacy. There are also indications that despite all the blockages, a fair amount of oil is still making it out of the Persian Gulf. Ship-to-ship transfers of oil outside the Strait of Hormuz are estimated around 2.4 million barrels per day this month, up from 1.4 million in August and 730,000 in July.
PRODUCTS
The product markets were both exhibiting outside days lower on their charts early Monday, which put them in a defensive mode.
NATURAL GAS
November Natural Gas was lower initially on Monday, just barely avoiding closing a gap from last Monday’s open (at 2.893). The market has been in a sideways/consolidation pattern for two months, around contract lows. The 6-10 and 8-14 day forecasts continue a pattern of mostly above normal temperatures across the lower 48-states, which has the potential to extend the cooling season (which is supportive to natural gas consumption for electricity generation), but it will also delay the startup of the heating season in the north (which has a bigger impact on gas consumption). Hot weather this summer may have kept domestic demand strong enough to avoid a steeper selloff give the record production. Expectations for steady demand growth in the future may have been hit by the backlash against data centers.
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