Written Commentary
CRUDE OIL
October Crude Oil is higher this morning, extending its recovery bounce from yesterday. New yesterday that another Greek-flagged oil tanker, this one carrying 150,000 barrels of crude, was attacked by Houthis has reminded traders of the ongoing threat this group poses to oil shipping. The ship’s operator, Delta Tankers, said it is working on a plan to move it to a safe location. This is the third ship owned operated by that company has been attacked in the Red Sea this month. Another vessel was hit yesterday near Yemen’s port of Aiden, but damage was minor, and the ship was continuing to its next port of call. EIA supply data was bullish this week with larger than expected draws in crude oil and product stocks, but the market initially rejected that news after very strong US jobs numbers from earlier this year were revised lower in an annual accounting. US crude oil stocks are the lowest in six years. The trade will be looking to Fed Chair Powell’s keynote speech today for any clues on a rate cut in next month’s FOMC meeting. Chinese demand concerns have pressured the market over the past two weeks, and rally of the past two days offers the chance for a correction.
PRODUCT MARKETS
Like crude oil, the products are seeing a short covering bounce from oversold levels.
NATURAL GAS
October Natural Gas was lower overnight, extending yesterday’s sharp selloff that came in the wake of a bearish EIA storage report. The EIA report showed US gas storage for the week ending August 16 at 3,299 bcf, +35 bcf from the previous week. This was above median expectations calling for an increase of 29 bcf. Storage was up 7.02 from a year ago +6.8% the previous week. Up until this week, the surplus to year ago and five year average levels had been declining throughout the summer. Last week’s report showed a counter-seasonal decline of 6 bcf from the previous week, and the bulls were clearly disappointed with the size of this week’s build, especially after reports of lower US production Storage levels tend to build slowly during the summer and climb more rapidly during the shoulder season. The NWS forecasts call for a mix of above and below normal temperatures across the lower 48 in the 6-10 and 8-14 day outlooks, which could lower cooling demand.
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