Written Commentary
CRUDE OIL
November Crude Oil was near unchanged overnight but was in the upper half of yesterday’s range. The support the market has drawn from lower output in the US Gulf last week is countered by low expectations for Chinese oil consumption. Analysts from LSEG said today that Asia’s ultra-low sulfur gasoil refining margins had fallen to their lowest levels in nearly three years. Reuters said yesterday that Libyan crude oil exports reached about 550,000 barrels per day last week, a three-fold increase from the previous week, citing data from analytics firm Kpler and a shipping agent. Libya’s National Oil Corporation, which manages their fossil fuel resources, has not declared force majeure on all port loadings, only on individual cargoes. More than 12% US Gulf crude oil production remained offline as of Monday. Traders are looking ahead to the FOMC result tomorrow, with expectations calling for a rate cut of 0.25% to 0.50%. A survey of analysts by Reuters showed an average expectation for a 200,000 barrel decline in US crude stocks for the week ending September 13. Refinery runs are expected to be down 1.2% to 92.65.
PRODUCT MARKETS
The Reuters survey is calling for a 400,000 barrel increase in gasoline stocks and no change to distillates. November RBOB is seeing a corrective rally off 2 ½ year lows.
NATURAL GAS
November Natural Gas is higher this morning and has traded its highest level since August 22. The industry apparently made it through last week’s hurricane without any significant damage to LNG loading facilities, and any slowdowns that did occur have likely ended. The Reuters survey showed an average expectation for a 51-67 bcf increase in US gas storage for this week’s EIA report. The five-year average increase for this week is 67 bcf. Weekly injections have been trending below average in recent weeks, sometime at the lowest level in five years, as US production has slowed in reaction to the low prices. US natural gas rigs in operation were up 3 rigs to 97 last week, but this was down from 121 a year ago and below the five-year average of 121.4. US storage levels are above average, but the surplus has been declining since June.
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