Written Commentary
CRUDE OIL
December Crude Oil is lower this morning but inside yesterday’s range as the market is bracketed between this week’s wide range. The conflict in the Mideast continue to provide underlying support. There were reports yesterday that the (Persian) Gulf states were lobbying Washington to stop Israel from attacking Iran’s oil sites because they were concerned that their own oil facilities could come under fire from Iran’s proxies. Saudi Arabia, UAE and Qatar are also refusing to let Israel fly over their airspace for any attack on Iran, and they have conveyed this to Washington. Iran has said that if the Gulf states open up their airspace to Israel, it would be an act of war. OPEC is believed to have enough spare capacity to make up for any loss of Iranian supply, but much of that is in Saudia Arabia and UAE. China published a draft law yesterday aimed a promoting the development of the private sector, in the country’s latest attempt to boost investor confidence amid their economic slowdown. The trade also awaits a press conference by China’s finance minister tomorrow, which is supposed to provide details on the government’s latest fiscal stimulus plans. There are concerns that hurricane damage will hurt upcoming demand. The evacuations did cause a spike in gasoline demand.
NATURAL GAS
December Natural Gas bounced yesterday despite a disappointing storage report and lowered expectations for electricity-generation demand due power outages from Hurricane Milton. More than 3 million homes and business in Florida were without power on Thursday morning. Yesterday’s EIA Gas Storage Report showed US gas storage for the week ending October 4 at 3,629 bcf, +82 bcf from 3,547 the previous week. This was above trade expectations of +57 to +77, but still below the five-year average increase for the week at +125 bcf. This was the first time in a while that storage came in above expectations, but the lower than average increase did allow the surplus to fall to +2.8% from a year ago from +3.0% the previous week. Supply is 4.9% above the five-year average versus 5.6% the previous week. Spot LNG prices did find support on anticipation of an improvement in demand, with an expected increase in gas flowing to a plant in Cove Point, Maryland after it was closed for three weeks for maintenance. The 6-10 and 8-14 day forecasts have a mix of above normal, below normal and normal temperatures across the lower 48, which paints a mixed picture for demand.
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