Written Commentary
CRUDE OIL
November Crude Oil extended this week’s rally overnight and traded to its highest level since August. The settlement of the dockworkers strike eases concerns about bottlenecks in both directions, and the jobs report this morning came in higher than expected, which eases some anxiety over the US economy that had crept into the market recently. Anxiety over Middle East supply has not eased, as analysts speculate over the likelihood that Israel would attack Iranian oil facilities and further escalate the conflict. Saudi Arabia and UAE appear to have capacity to make up for an interruption in Iranian supplies. Libya’s national oil company announced yesterday that its oilfields and export facilities have reopened after shutting down last month.
PRODUCT MARKETS
November RBOB is approaching key resistance at the 200-day moving average at 2.1310, which happens to coincide with the 0.618 retracement of the selloff from the July high to last month’s low.
NATURAL GAS
November Natural Gas traded to its highest level since July 3 overnight but backed off from that level and was lower on the day this morning. We suspect that the market has gotten overdone on the bullish trend in US supply and could be set for a correction. Weather forecasts for the Lower 48 suggest below normal heating degree days would outstrip above normal cooling degree days over the next couple of weeks, leading to lower than normal gas demand overall. Yesterday’s weekly EIA gas storage report was bullish, with storage for the week ending September 27 at 3,547 bcf, +55 bcf from 3,492 the previous week. This was a smaller than expectations calling for a build of 60 to 65 bcf. Storage was up 3.0% from a year ago and 5.6% above the five-year average versus +4.0% and +7.1% the previous week. The settlement of the port workers strike eases concerns about a potential disruption to US LNG exports. November Natural Gas has an outside day lower going this morning, which could lead to a correction of rally off the September 3 low.
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