Crude Slips Amid Broader Risk-Off Trading; Gas Prices Move Higher as FM on TCO Disrupts Flows

Crude slips amid broader risk-off trading

• The WTI prompt-month contract fell $0.23 to $94.86/Bbl Thursday morning (7:30 AM CT)
• Crude traded lower alongside a broader selloff in equities as investors reduced exposure to riskier assets
• • “Oil appears to be getting caught up in the broader risk-off move across markets,” said Emily Ashford of Standard Chartered Bank
• Despite the weaker trading sentiment, the physical market remains tight and vulnerable to further geopolitical disruptions and elevated freight costs
• • The IEA reported that observed global oil inventories ended September 509 MMBbl below prewar levels, with onshore stocks at their lowest level since at least 2016
  • Attacks on vessels near the Strait of Hormuz have also accelerated in October, threatening recent improvements in regional oil flows
  • The Trump administration is considering allowing previously sanctioned shadow-fleet tankers to carry non-sanctioned oil, including US crude, in an effort to increase vessel availability and reduce freight costs
• Meanwhile, concerns over the economic impact of elevated energy prices continue to weigh on the demand outlook
• • The IEA now expects global oil demand to decline by 2.6 MMBbl/d in 2026, compared with its previous forecast for a 2.5 MMBbl/d decline
• Domestically, preliminary API data showed an 11.1 MMBbl decline in US crude inventories last week
• • Official EIA inventory data are scheduled for release later Thursday

Gas prices move higher as another Force Majeure on TCO disrupts flows

• Natural gas is up 3.8c to $3.236/MMBtu (As of 07:30 AM CDT)
• Force Majeure was declared on TCO’s MXPSEG system yesterday afternoon, forcing 1.9 Bcf/d offline
• TCO receipts within Appalachia were pushed down to similar lows to the MXP outage from a few weeks ago, falling to 2.9 Bcf/d from 4.9 Bcf/d recent highs
• • Before the MXP outage a few weeks ago, average daily receipts were a bit higher still, at around 5.3 Bcf/d

Forecasted weather changes were light this morning, with some bearish cooling in the southeast and warming in the Midwest and Rockies

• This October is still on track to be the third warmest on record, which has lifted power demand in the shoulder season

The EIA releases its weekly natural gas storage report this morning at 09:30 AM CT, with a median estimate of a 74 Bcf build as reported by Bloomberg

• The 5-year average build is 90 Bcf this week, so if median analyst expectations are correct, this will be nine straight weeks of a tightening surplus