Written Commentary
The Ghost in the Machine Q3 2025
October 6, 2025
CRUDE OIL
December Crude Oil was sharply higher overnight, for the second day in a row, after the Trump Administration stepped up its sanctions against Russian oil, hitting that nation’s two biggest oil companies, Rosneft and Lukoil. US Treasury has given companies until November 21 to wind down their transactions with the Russian producers. The implication is that oil refineries, in China and India especially, will now need to seek alternative suppliers to avoid exclusion from US capital markets. Up to this point, China and India have been buying Russian oil despite the western sanctions, but the market apparently thinks this time is different. There are indications that India may be ready to comply with the sanctions this time around. Oil industry sources told Reuters that Indian refiners were ready to sharply curtail their imports of Russian oil imports to ensure they were in compliance with the sanctions. There is an added incentive for the Indian government to comply in order to reduce the steep tariffs the US put in place on Indian imports. Sources told Reuters that privately-owned Reliance Industries, the top Indian buyer of Russian crude, plans to reduce or halt completely its import of Russian oil.
NATURAL GAS
December Natural Gas slightly higher this morning but inside yesterday’s range after trading to its highest level since October 8 yesterday. More seasonable weather has arrived in the US after a mostly warmer than normal trend of the past several weeks, and this is allowing US heating demand to pick up. The latest 6-10 and 8-14 day forecasts have near normal temps over much of the US Midwest/Great Lakes regions and points east, with some below normal emerging in the southeastern US. However, an above normal pattern emerges from the western Midwest to the West Coast.
PRODUCTS
Product prices are both sharply higher this morning off the announcement of the new US sanctions on Russian oil producers. This follows an EIA report yesterday that was supportive gasoline but less so for diesel. Gasoline and distillate stocks both fell, but gasoline stocks fell more than expected and distillate stocks less than expects.
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