Friday 10/17 Trading Economics:
WTI Oil
WTI crude oil futures edged up 0.1% to settle at $57.50 per barrel on Friday, marking a third consecutive weekly decline and a near 3% weekly loss amid rising oversupply concerns and ongoing geopolitical uncertainty.
> The market was shaped by news that Presidents Trump and Putin plan to meet within two weeks to discuss the war in Ukraine, following a temporary cease-fire in Gaza between Israel and Hamas.
> President Zelenskyy also met with Trump to seek additional military support, including long-range Tomahawk missiles, while Washington pressed India and China to limit Russian oil imports. < If Ukraine starts sending Tomahawks deep into Russia this war could get out of hand.
> Oversupply worries remained prominent, with the International Energy Agency projecting a growing global crude glut in 2026 and US inventories rising sharply last week. < Inventories did not "rise sharply". This is the time of year when crude oil inventories need to build because refiners need more black oil to make home heating oil. IEA always under-estimates demand.
> US production reached a record 13.636 million bpd, and traders reported surging bids for storage at key hubs, signaling expectations of continued oversupply.
Natural Gas
The front month US natural gas futures contract (NOV25) rose nearly 3% to above $3/MMBtu on Friday but were still set for a second straight weekly loss, near a three-week low of $2.927 hit in the previous session.
> Prices were pressured by mild weather forecasts and ample storage, despite a drop in output and near-record LNG exports.
> Data from LSEG showed average gas production in the Lower 48 states fell to 106.6 bcfd in October, down from 107.4 bcfd in September and a record 108 bcfd in August.
> Earlier high output allowed companies to build inventories, leaving storage levels about 4% above the five-year average. < Rising LNG exports and one good cold wave will wipe out the storage surplus. In December 2024, during the four weeks that ended December 27th draws from storage exceed the 5-year average by 102 Bcf. During this coming December LNG exports will be ~4 Bcfpd higher than last December.
> Forecasters expect warmer-than-normal weather through early November, which will cut heating demand more than it boosts cooling needs, keeping overall gas use low.
> Meanwhile, gas flows to the eight major US LNG export terminals hit 16.4 bcfd, up from 15.7 bcfd in September and close to a record, highlighting strong global demand even as domestic consumption softens.
On October 30th the DEC25 contract will be the front month. It closed at $3.72 today and JAN26 closed at $4.04.
Bottomline:There is a lot of "Political Noise" putting pressure on the price of oil. I have no idea when the noise will stop, but if WTI does go down to $50/bbl the upstream companies will slam the breaks on their drilling programs and the seeds of the next oil price rebound will sprout and grow quickly. Load up on the Gassers. There is a good chance we see $4.00/MMBtu in December.
Winter NGas price firming up today.
NYMEX Futures contracts.
DEC25 + $0.106 to close at $3.741
JAN26 + $0.107 to close at $4.054
FEB26 + $0.101 to close at $3.868
MAR26 + $0.089 to close at $3.555
The winter of 2024/2025 was considered a mild winter. Yet from 11/30/2024 through 3/7/2025 the draws from storage were 481 Bcf higher than the 5-year average. With LNG exports much higher this year, if we have about the same winter draws you will see the entire 2026 strip go over $4.00.
Dan Steffens
Energy Prospectus Group |
