Crude Slips as IEA Accelerates Reserve Releases; Gas Sells Down as TCO Sets MXPSEG Return to Tomorrow

Crude slips as IEA accelerates reserve releases

• The WTI prompt-month contract fell $0.54 to $97.43/Bbl Friday morning (7:30 AM CT)
• The International Energy Agency agreed to accelerate the remaining releases under its March emergency-stock commitments, with roughly 100 MMBbl still expected to reach the market
• • The planned releases include more than 20 MMBbl of diesel that members intend to make available as quickly as possible
  • Members have released approximately 330 MMBbl so far against commitments exceeding 400 MMBbl
• Uncertainty surrounding Persian Gulf supply remains elevated as Iranian attacks around the Strait of Hormuz have intensified over the past 10 days
• The Trump administration is considering easing sanctions on certain shadow-fleet tankers to allow legitimate operators to transport non-sanctioned oil
• The proposal is intended to expand available shipping capacity as attacks, higher insurance costs and inefficient Hormuz shuttle operations keep freight rates elevated
• Shipping analysts expect the proposal to provide little immediate relief to tanker markets
• • Kpler estimates that only about 24 sanctioned supertankers could return to mainstream trade after excluding aging vessels and tankers owned by Iran’s national shipping company
  • Certification, insurance and maintenance issues, along with remaining EU and UK restrictions, could prevent many vessels from returning to commercial service
  • “A sustained decline in rates requires a reduction in regional security risks and a normalization of vessel operations, not simply the removal of ships from sanctions list,” says Matt Wright of Kpler

Gas sells down as TCO says MXPSEG is returning tomorrow

• Natural gas is down -13.5c to $3.101/MMBtu (As of 07:30 AM CDT)
• L48 gas production has been lower the last few days amidst the pipeline issues across Appalachia
• • TCO MXPSEG outage continues, however TCO just sent out that returns on MXPSEG will return to normal tomorrow, easing fears of a more long-dated disruption to flows
• L48 production is at 109.5 Bcf/d this morning, around 2.6 Bcf/d below the September monthly average (Criterion)

The overall L48 storage surplus continues to shrink, down to just 45 Bcf

• Elevated Power demand across the Southeast, Texas, and the West have so far offset rescom losses in the Northeast and Midwest regions this month
• • This comes to 2.5-3.0 Bcf/d of surplus weather driven demand over the average through the first two weeks of October
• CWG labels October as the third hottest on record

Temperature changes were mixed this morning

• L48 average temperatures edged lower, led by losses along the east coast across the forecast period, but partially offset by some heating in the Midwest