CRUDE OIL
The crude oil market found mild support overnight from a potential hurricane that is approaching the US Gulf Coast. The current track has it hitting landfall near the Texas/Louisiana border around 1 PM on Wednesday. It is still only in the “potential” stage, and there is plenty time for it to change its path, but conditions are ripe. This follows a steep selloff on Friday to the lowest level since June 2023 for the nearby contract on a disappointing US jobs data. Analysts at Goldman Sachs said over the weekend that China’s annual oil demand growth has slowed from 500,000-600,000 barrels per day before COVID to around 200,000 bpd currently due to the adoption of electric vehicle and trucks powered by LNG but most recently by lower refinery output and a slower economy. They expect China’s gasoline consumption to grow 2.5%-3% next year, even with the growth of EVs. US oil rigs in operation were unchanged at 483 last week. This was down from 513 rigs a year ago and below the five-year average of 485. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 61,660 contracts of crude oil for the week ending September 3, reducing their net long to 124,868.
PRODUCT MARKETS
Like crude oil, the product markets are finding mild support today off the threat of a hurricane hitting the US Gulf Coast later this week. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 911 contracts of RBOB for the week ending September 3, reducing their net long to 16,668. This is close to a flat position. For ULSD, managed money traders were net sellers of 3,479 contracts, increasing their net short to 23,922. This is their largest net short since May 2020
NATURAL GAS
October Natural Gas was lower overnight, as the potential hurricane forecast for the US Gulf Coast could interrupt LNG loading facilities and cause a backup in US supply, as happened earlier this year. The market may have also been disappointed with the failure to extend its rally on Friday. US natural gas rigs in operation were down 1 rig to 94 last week. This was down from 113 rigs a year ago and below the five-year average of 122.4. It was also down from 103 rigs in July and was the third straight weekly decline. This points to lower production ahead and provides further support to the idea that US gas supply will continue to tighten and fall below year-ago levels later this year or early next. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 751 contracts of natural gas for the week ending September 3, reducing their net short to 69,956.
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