Written Commentary
CRUDE OIL
December Crude Oil was lower early Monday but inside Friday’s range. News that top officials from Saudi Arabia, Turkey, and Pakistan were to meet Iran’s leaders today offered some hope of movement towards an agreement to increase oil flows of some sort. On the other hand, the Houthis said they struck pumping stations on Saudi Arabia’s East-West pipeline, as well as the airport in Riyadh. The was no confirmation from Saudi Arabia, but the Saudis did say they had intercepted more missiles and drones. Data from the Washington Institute for Near East Policy indicated that there have been 28 confirmed and reported attacks on ships in the Strait of Hormuz and nearby waterways this month, which is the highest since the Iran war began.
PRODUCTS
December RBOB was slightly higher early Monday but inside Friday’s range. Unlike crude, RBOB did not make new highs last week. The market has been consolidating its recent gains, but moving past the key driving season take some urgency out of the equation. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 4,054 contracts of RBOB for the week ending October 20, reducing their net long to 93,591. This is towards the upper end of the historic range and might be considered burdensome. December ULSD did trade to a new contract high on Friday but just barely
NATURAL GAS
December Natural Gas was sharply lower early Monday, extending its selloff from Friday to its lowest level since June 2021. The nearby contract fell to its lowest level since April. The warm trend continues, with the 6-10 and 8-14 day maps showing above normal to much above normal temps from the Great Plains to the East Coast, and this keeps demand expectations low. US production recovered last week after interruptions earlier in the month. LSEG said average gas output in the lower 48 states last week was 113.3 bcfd, which matched the record highs from August and September. For the month so far, the average is 111.6 bcfd. On Friday, LSEG was estimating average gas flows to the nine major US LNG export plants at 18.2 bcfd so far in October, up from 17.9 bcfd in September but below the record 18.8 bcfd in April.
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