Written Commentary
The Ghost in the Machine Q3 2025
October 6, 2025
CRUDE OIL
December Crude Oil is higher this morning, with the trade still taking a generally positive tone from the sanctions on Russian oil producers that were announced last week. Reuters reported that Saudi Arabia may reduce its December crude price for Asian buyers due to ample supplies but not by much as demand to replace Russian supplies hit by Western sanctions could limit the cuts. OPEC+ members will meet on Sunday to decide an output quota for December, and reports say the group is leaning towards a small increase of 137,000 barrels per day. TotalEnergies Chief Executive Officer Patrick Pouyanne said on an earnings call yesterday that he thinks the market is underestimating the impact of the latest round of sanctions on Russian oil producers, as it is pushing up shipping rates and tightening supply of diesel. There have also been reports that India and China are cutting back on their purchases of Russian crude in the wake of the sanctions, at least as they negotiate trade deals with the US. Three Indian refiners accounting for more than half of the nation’s imports of Russian crude have paused purchases for the coming months
NATURAL GAS
December Natural Gas gapped higher overnight and extended yesterday’s rally and is approaching its October 2 high at 4.211. This is despite an ongoing mild weather pattern in the US that will slow heating consumption and a slightly bearish weekly storage report yesterday. US LNG exports have reached a new record this month,, while at the same time US production has come off its record highs from August. LSEG said average gas output in the Lower 48 states fell to 107.0 billion cubic feet per day (bcfd) so far in October, down from 107.5 bcfd in September and a record 108.0 bcfd in August.
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