EIA REPORT
• My projection for tomorrow’s EIA report is below the market consensus – meaning that I expect a smaller build relative to the market expectations – which implies a possibility for a “bullish surprise”. However, any surprise is possible.
• Reuters survey: +6 bcf
• Bluegold Trader: -8 bcf (South Central: -10 bcf)
• LSEG: -6 bcf
• Gelber & Associates: +9 bcf
• DTN: +23 bcf
• NGI: +1 bcf
• My projection for tomorrow’s EIA report is below the market consensus – meaning that I expect a smaller build relative to the market expectations – which implies a possibility for a “bullish surprise”. However, any surprise is possible.
• Reuters survey: +6 bcf
• Bluegold Trader: -8 bcf (South Central: -10 bcf)
• LSEG: -6 bcf
• Gelber & Associates: +9 bcf
• DTN: +23 bcf
• NGI: +1 bcf
U.S #natgas storage surplus (vs the five-year average) is currently projected to shrink to just +22bcf by October 4.
ECMWF 00z Ensemble is relatively neutral vs yesterday's 12z results (+2 bcf) but is bearish vs yesterday's 00z results (-6 bcf). Today's early morning pipeline nominations are down sharply. Dry #natgas production is currently estimated at 100.6 bcf/d (-1.3 bcf/d from yesterday).
U.S. dry #natgas production is estimated to have dropped to 100.4 bcf/d today (-1.4 bcf/d from yesterday). However, it may be revised higher tomorrow.
EIA #NATGAS REPORT
• My projection for tomorrow’s EIA report is below the market consensus – meaning that I expect a smaller build relative to the market expectations – which implies a possibility for a “bullish surprise”. However, any surprise is possible.
• Reuters survey: +29 bcf
• Bluegold Trader: +22 bcf (South Central: -17 bcf)
• LSEG: +20 bcf
• Gelber & Associates: +25 bcf
• DTN: +41 bcf
• NGI: +27 bcf
• My projection for tomorrow’s EIA report is below the market consensus – meaning that I expect a smaller build relative to the market expectations – which implies a possibility for a “bullish surprise”. However, any surprise is possible.
• Reuters survey: +29 bcf
• Bluegold Trader: +22 bcf (South Central: -17 bcf)
• LSEG: +20 bcf
• Gelber & Associates: +25 bcf
• DTN: +41 bcf
• NGI: +27 bcf
NEWS AND ANALYSIS
Natural gas – United States
• U.S. natgas futures dropped by about 6% to a two-week low on Thursday on a bigger-than-expected weekly storage build and forecasts for less hot weather over the next two weeks than previously expected.
• That less hot weather should reduce the amount of gas electric power generators burn to keep air conditioners humming.
• The U.S. Energy Information Administration (EIA) said utilities added 35 billion cubic feet (bcf) of gas into storage during the week ended Aug. 16.
• That was more than the 29-bcf build analysts forecast in a Reuters poll and compares with an increase of 23 bcf in the same week last year and a five-year (2019-2023) average rise of 41 bcf for this time of year.
• Even though the storage build was less than expected, it was still smaller than normal for a 13th time in the past 14 weeks, including the rare summer withdrawal during the week ended Aug. 9. That withdrawal was the first weekly decline in August since 2006.
• With the latest build, gas stocks were still about 13% above normal for this time of year.
• Front-month gas futures for September delivery on the New York Mercantile Exchange fell 12.4 cents, or 5.7%, to settle at $2.053 per MMBtu, their lowest close since Aug. 6.
• In the spot market, pipeline constraints caused next-day gas prices at the Waha hub in the Permian Shale in West Texas to average in negative territory again for a record 28th time this year.
• Waha prices first averaged below zero in 2019. It happened 17 times in 2019, six in 2020 and once in 2023.
• Producers increase and decrease output in reaction to prices, but it usually takes a few months for changes in drilling activity to show up in the production data.
• Average monthly spot prices at the U.S. Henry Hub benchmark in Louisiana hit a 12-month high of $3.18 per MMBtu in January before dropping to a 44-month low of $1.72 in February and a 32-year low of $1.49 in March, according to Reuters and federal energy data.
• In reaction to that price plunge, producers cut average monthly output from 106.0 bcf/d in February to 102.7 bcf/d in March, 101.5 bcf/d in April and a 17-month low of 101.3 bcf/d in May, according to federal energy data.
• Winter storms at the start of the year caused output to fall from a record 106.3 bcf/d in December to 103.6 bcf/d in January.
• As monthly spot Henry Hub prices increased to $1.60 per MMBtu in April, $2.12 in May and $2.54 in June, some producers, including EQT and Chesapeake Energy, started to increase drilling activities, boosting output to 101.0 bcf/d in June and 103.4 bcf/d in July.
• But with average spot Henry Hub prices back down to $2.08 per MMBtu in July and $2.02 so far in August, analysts said output would likely decline as some producers reduce drilling activities again.
• Financial firm LSEG said gas output in the U.S. Lower 48 U.S. states has slid to an average of 102.3 bcf/d so far in August, down from 103.4 bcf/d in July.
• LSEG forecast average gas demand in the Lower 48, including exports, will rise from 103.7 bcf/d this week to 103.9 bcf/d next week. Those forecasts were lower than LSEG's outlook on Wednesday.
• Gas flows to the seven big U.S. LNG export plants rose to 12.9 bcf/d so far in August, up from 11.9 bcf/d in July. That compares with a monthly record high of 14.7 bcf/d in December 2023.
Natural gas– Europe
Natural gas – United States
• U.S. natgas futures dropped by about 6% to a two-week low on Thursday on a bigger-than-expected weekly storage build and forecasts for less hot weather over the next two weeks than previously expected.
• That less hot weather should reduce the amount of gas electric power generators burn to keep air conditioners humming.
• The U.S. Energy Information Administration (EIA) said utilities added 35 billion cubic feet (bcf) of gas into storage during the week ended Aug. 16.
• That was more than the 29-bcf build analysts forecast in a Reuters poll and compares with an increase of 23 bcf in the same week last year and a five-year (2019-2023) average rise of 41 bcf for this time of year.
• Even though the storage build was less than expected, it was still smaller than normal for a 13th time in the past 14 weeks, including the rare summer withdrawal during the week ended Aug. 9. That withdrawal was the first weekly decline in August since 2006.
• With the latest build, gas stocks were still about 13% above normal for this time of year.
• Front-month gas futures for September delivery on the New York Mercantile Exchange fell 12.4 cents, or 5.7%, to settle at $2.053 per MMBtu, their lowest close since Aug. 6.
• In the spot market, pipeline constraints caused next-day gas prices at the Waha hub in the Permian Shale in West Texas to average in negative territory again for a record 28th time this year.
• Waha prices first averaged below zero in 2019. It happened 17 times in 2019, six in 2020 and once in 2023.
• Producers increase and decrease output in reaction to prices, but it usually takes a few months for changes in drilling activity to show up in the production data.
• Average monthly spot prices at the U.S. Henry Hub benchmark in Louisiana hit a 12-month high of $3.18 per MMBtu in January before dropping to a 44-month low of $1.72 in February and a 32-year low of $1.49 in March, according to Reuters and federal energy data.
• In reaction to that price plunge, producers cut average monthly output from 106.0 bcf/d in February to 102.7 bcf/d in March, 101.5 bcf/d in April and a 17-month low of 101.3 bcf/d in May, according to federal energy data.
• Winter storms at the start of the year caused output to fall from a record 106.3 bcf/d in December to 103.6 bcf/d in January.
• As monthly spot Henry Hub prices increased to $1.60 per MMBtu in April, $2.12 in May and $2.54 in June, some producers, including EQT and Chesapeake Energy, started to increase drilling activities, boosting output to 101.0 bcf/d in June and 103.4 bcf/d in July.
• But with average spot Henry Hub prices back down to $2.08 per MMBtu in July and $2.02 so far in August, analysts said output would likely decline as some producers reduce drilling activities again.
• Financial firm LSEG said gas output in the U.S. Lower 48 U.S. states has slid to an average of 102.3 bcf/d so far in August, down from 103.4 bcf/d in July.
• LSEG forecast average gas demand in the Lower 48, including exports, will rise from 103.7 bcf/d this week to 103.9 bcf/d next week. Those forecasts were lower than LSEG's outlook on Wednesday.
• Gas flows to the seven big U.S. LNG export plants rose to 12.9 bcf/d so far in August, up from 11.9 bcf/d in July. That compares with a monthly record high of 14.7 bcf/d in December 2023.
Natural gas– Europe
• Dutch and British wholesale gas prices inched up on Thursday morning after some contracts hit fresh 2-week lows on Wednesday.
• The benchmark front-month contract at the Dutch TTF hub was up 0.12 euro at 37.28 euros per MWh, or 12.17 $/MMBtu by 0847 GMT, according to LSEG data.
• On Wednesday, the contract closed at its lowest level since Aug. 6.
• The Dutch day-ahead contract was up 0.48 euro at 36.78 euros/MWh.
• In the British market, the day-ahead contract was up 0.75 pence at 85.00 pence per therm.
• "It is too early to conclude that the bullish trend is over, but it is clearly challenged," analysts at Engie EnergyScan said in a morning report.
• After initially trading flat on Wednesday, prices dropped once the U.S. market opened, which saw a further trimming of long positions and profit taking, LSEG analyst Wayne Bryan said.
• "Even the revision of some Gassco maintenance including bringing Karsto forward failed to spark any bullish interest with storage refilling at 90% and on a solid trajectory ahead of winter," he added.
• European gas storage has reached 90.29% full, having hit a Nov. 1 target two months earlier, Gas Infrastructure Europe data showed.
• Norwegian planned maintenance schedules will cut pipeline deliveries by nearly 50% for most of September, data from infrastructure operator Gassco showed.
• Meanwhile, geopolitical risk premiums over peace talks for Gaza and Russian gas flows through Ukraine continue to dwindle, but developments still needed monitoring, LSEG's Bryan said.
• Gas continues to flow into Ukraine via the border point of Sudzha and Russia's Gazprom said it would send 42.4 mcm of gas to Europe via Ukraine on Thursday, unchanged from Wednesday.
• Meanwhile, investment funds continued to extend their net long positions last week, analysts at ING said.
• "This leaves significant downside risk to the market, particularly if supply risks fail to translate to actual supply losses," they added.
• In the European carbon market, the benchmark contract eased 0.16 euro to 71.98 euros a metric ton.
Crude Oil – Global
• The benchmark front-month contract at the Dutch TTF hub was up 0.12 euro at 37.28 euros per MWh, or 12.17 $/MMBtu by 0847 GMT, according to LSEG data.
• On Wednesday, the contract closed at its lowest level since Aug. 6.
• The Dutch day-ahead contract was up 0.48 euro at 36.78 euros/MWh.
• In the British market, the day-ahead contract was up 0.75 pence at 85.00 pence per therm.
• "It is too early to conclude that the bullish trend is over, but it is clearly challenged," analysts at Engie EnergyScan said in a morning report.
• After initially trading flat on Wednesday, prices dropped once the U.S. market opened, which saw a further trimming of long positions and profit taking, LSEG analyst Wayne Bryan said.
• "Even the revision of some Gassco maintenance including bringing Karsto forward failed to spark any bullish interest with storage refilling at 90% and on a solid trajectory ahead of winter," he added.
• European gas storage has reached 90.29% full, having hit a Nov. 1 target two months earlier, Gas Infrastructure Europe data showed.
• Norwegian planned maintenance schedules will cut pipeline deliveries by nearly 50% for most of September, data from infrastructure operator Gassco showed.
• Meanwhile, geopolitical risk premiums over peace talks for Gaza and Russian gas flows through Ukraine continue to dwindle, but developments still needed monitoring, LSEG's Bryan said.
• Gas continues to flow into Ukraine via the border point of Sudzha and Russia's Gazprom said it would send 42.4 mcm of gas to Europe via Ukraine on Thursday, unchanged from Wednesday.
• Meanwhile, investment funds continued to extend their net long positions last week, analysts at ING said.
• "This leaves significant downside risk to the market, particularly if supply risks fail to translate to actual supply losses," they added.
• In the European carbon market, the benchmark contract eased 0.16 euro to 71.98 euros a metric ton.
Crude Oil – Global
• Oil prices settled up more than 1% on Thursday, as expectations for a U.S. interest rate cut in a few weeks fueled a rebound after four days of price declines.
• Brent crude futures settled up $1.17, or 1.54%, to $77.22 a barrel. U.S. West Texas Intermediate crude futures gained$1.08, or 1.5%, to $73.01.
• On Wednesday, minutes of the Federal Reserve's July meeting showed most Fed officials thought the central bank was on track for an interest rate cut next month.
• Higher interest rates increase the cost of borrowing, which can slow economic activity and dampen demand for oil.
• "The dollar has been sold off on the interest rate cut news," said John Kilduff, Partner at Again Capital. "Everyone is now talking about the Fed cutting rates by 50 basis points, which would be significant," he said.
• Fed Chair Jerome Powell is due to speak on Friday at the annual central banking conference in Jackson Hole, Wyoming. Traders will look for any insight into whether Powell expects to cut rates by 25 or 50 basis points.
• The U.S. dollar has fallen recently on concerns about a weakening economy, supporting oil prices as buyers using other currencies pay less for dollar-denominated crude.
• On Thursday, the U.S. Labor Department said the number of jobless claims ticked up last week, but appeared to be steadying near a level consistent with gradual cooling of the labor market. This set the stage for interest rate cuts.
• Also supporting oil prices, a U.S. government report on Wednesday showed crude, gasoline and distillate inventories fell by more than expected last week, a sign of demand picking up.
• In the Middle East, Iran-aligned Houthi militants continued attacks on international shipping in solidarity with Palestinians in the war between Israel and Hamas.
• A Greek-flagged oil tanker carrying 150,000 tonnes of crude that was evacuated by its crew after being attacked in the Red Sea now poses an environmental hazard, the EU's Red Sea naval mission "Aspides" said on Thursday.
• Investors are watching OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, which may reconsider its plan to gradually unwind some output cuts in October.
• OPEC+ has said the plan to raise output could be paused or reversed if needed.
• Brent crude futures settled up $1.17, or 1.54%, to $77.22 a barrel. U.S. West Texas Intermediate crude futures gained$1.08, or 1.5%, to $73.01.
• On Wednesday, minutes of the Federal Reserve's July meeting showed most Fed officials thought the central bank was on track for an interest rate cut next month.
• Higher interest rates increase the cost of borrowing, which can slow economic activity and dampen demand for oil.
• "The dollar has been sold off on the interest rate cut news," said John Kilduff, Partner at Again Capital. "Everyone is now talking about the Fed cutting rates by 50 basis points, which would be significant," he said.
• Fed Chair Jerome Powell is due to speak on Friday at the annual central banking conference in Jackson Hole, Wyoming. Traders will look for any insight into whether Powell expects to cut rates by 25 or 50 basis points.
• The U.S. dollar has fallen recently on concerns about a weakening economy, supporting oil prices as buyers using other currencies pay less for dollar-denominated crude.
• On Thursday, the U.S. Labor Department said the number of jobless claims ticked up last week, but appeared to be steadying near a level consistent with gradual cooling of the labor market. This set the stage for interest rate cuts.
• Also supporting oil prices, a U.S. government report on Wednesday showed crude, gasoline and distillate inventories fell by more than expected last week, a sign of demand picking up.
• In the Middle East, Iran-aligned Houthi militants continued attacks on international shipping in solidarity with Palestinians in the war between Israel and Hamas.
• A Greek-flagged oil tanker carrying 150,000 tonnes of crude that was evacuated by its crew after being attacked in the Red Sea now poses an environmental hazard, the EU's Red Sea naval mission "Aspides" said on Thursday.
• Investors are watching OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, which may reconsider its plan to gradually unwind some output cuts in October.
• OPEC+ has said the plan to raise output could be paused or reversed if needed.
Global LNG
• Asian spot LNG prices eased this week from a more than eight-month top on the back of easing spot demand and as European gas prices also fell.
• The average LNG price for October delivery into north-east Asia was at $13.80 per MMBtu, industry sources estimated, down from $14.10/MMBtu last week.
• Despite hot weather in east Asia driving up gas consumption for power demand, the higher prices limited buying from some importers in the region. Asian LNG prices could continue to drop next week as well, said Ana Subasic, natural gas and LNG analyst at data and analytics firm Kpler.
• "While there may be some spot demand from Japan and South Korea due to high power sector gas consumption, price-sensitive buyers in South and Southeast Asia are expected to hold off on purchases until prices fall," she said.
• "Recently, buyers in India and Thailand have failed in awarding spot tenders," she added.
• The price declines come despite supply disruptions from one of the two trains at Australia's Ichthys LNG plant in Darwin this week, its second outage in the past month.
• In Europe, S&P Global Commodity Insights assessed its daily Northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in October on an ex-ship (DES) basis at $12.047/MMBtu on Aug. 22, a $0.15/MMBtu discount to the October gas price at the Dutch TTF hub.
• Argus assessed it at $12.00/MMBtu, while Spark Commodities assessed the September price at $11.794/MMBtu.
• Europe gas prices eased on Friday amid cooler temperatures and weak renewables generation. Temperatures across Europe are also seen dropping this weekend, said Kpler's Subasic, adding that strong renewable power generation is likely to reduce the need for gas-fired power.
• Meanwhile, U.S. feedgas flows have been stable, while regulatory filings show Corpus Christi's stage 3 and the Plaquemines terminals are stepping closer to first feedgas receipts and first LNG production, in line with their planned start-up dates, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
• On LNG freight, Atlantic rates fell for a second straight week to $61,500/day on Friday, said Spark Commodities analyst Qasim Afghan. This is the biggest week-on-week decrease in over a month and marks an over $15,000 decline in the last two weeks, he added.
• Pacific rates also declined, easing to $78,750/day.
• Asian spot LNG prices eased this week from a more than eight-month top on the back of easing spot demand and as European gas prices also fell.
• The average LNG price for October delivery into north-east Asia was at $13.80 per MMBtu, industry sources estimated, down from $14.10/MMBtu last week.
• Despite hot weather in east Asia driving up gas consumption for power demand, the higher prices limited buying from some importers in the region. Asian LNG prices could continue to drop next week as well, said Ana Subasic, natural gas and LNG analyst at data and analytics firm Kpler.
• "While there may be some spot demand from Japan and South Korea due to high power sector gas consumption, price-sensitive buyers in South and Southeast Asia are expected to hold off on purchases until prices fall," she said.
• "Recently, buyers in India and Thailand have failed in awarding spot tenders," she added.
• The price declines come despite supply disruptions from one of the two trains at Australia's Ichthys LNG plant in Darwin this week, its second outage in the past month.
• In Europe, S&P Global Commodity Insights assessed its daily Northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in October on an ex-ship (DES) basis at $12.047/MMBtu on Aug. 22, a $0.15/MMBtu discount to the October gas price at the Dutch TTF hub.
• Argus assessed it at $12.00/MMBtu, while Spark Commodities assessed the September price at $11.794/MMBtu.
• Europe gas prices eased on Friday amid cooler temperatures and weak renewables generation. Temperatures across Europe are also seen dropping this weekend, said Kpler's Subasic, adding that strong renewable power generation is likely to reduce the need for gas-fired power.
• Meanwhile, U.S. feedgas flows have been stable, while regulatory filings show Corpus Christi's stage 3 and the Plaquemines terminals are stepping closer to first feedgas receipts and first LNG production, in line with their planned start-up dates, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
• On LNG freight, Atlantic rates fell for a second straight week to $61,500/day on Friday, said Spark Commodities analyst Qasim Afghan. This is the biggest week-on-week decrease in over a month and marks an over $15,000 decline in the last two weeks, he added.
• Pacific rates also declined, easing to $78,750/day.
If you trade natural gas and planning to initiate a trade in October (V) contract, read this article first. I have looked at the history of October contract performance over the past 15 years and studied the fundamentals, and now I would like to share the results with you.
Seeking Alpha
Natural Gas October Contract: What To Expect?
October contract has been one of the most volatile natural gas contracts historically. Click here to find out if we can avoid the repeat of 2020 and 2022.
WEATHER / NATGAS update. Overall, GFS 12z Ensemble is bullish vs today’s 00z results (+15 bcf) and is bullish vs yesterday's 12z results (+9 bcf). Overall, ECMWF 12z is bullish vs today’s 00z results (+8 bcf) and is bullish vs yesterday's 12z (+13 bcf). Dry gas production is currently estimated at 102.2 bcf/d (-0.1 bcf/d from yesterday).
Although U.S. dry #natgas production remains higher than most natgas bulls would prefer (production is currently estimated at 102.2 bcf/d), net supply is actually below both 2023 and 2022 level and is just 1.7 bcf/d above the 5-year average.
EIA #NATGAS REPORT
• My projection for tomorrow’s EIA report is below the market consensus – meaning that I expect a smaller build relative to the market expectations – which implies a possibility for a “bullish surprise”. However, any surprise is possible.
• Reuters survey: +39 bcf
• Bluegold Trader: +37 bcf (South Central: -5 bcf)
• LSEG: +38 bcf
• Ritterbusch Associates: +35 bcf
• DTN: +52 bcf
• SMC Report: +42 bcf
• My projection for tomorrow’s EIA report is below the market consensus – meaning that I expect a smaller build relative to the market expectations – which implies a possibility for a “bullish surprise”. However, any surprise is possible.
• Reuters survey: +39 bcf
• Bluegold Trader: +37 bcf (South Central: -5 bcf)
• LSEG: +38 bcf
• Ritterbusch Associates: +35 bcf
• DTN: +52 bcf
• SMC Report: +42 bcf
In the week ending Aug 30, U.S frac spread count has dropped to 222, the lowest since May 7, 2021. Frac spread count is down -22 y-o-y and has been declining in annual terms for 15 consecutive weeks now. However, #natgas production remains rather high - around 102.00 bcf/d.
WEATHER / NATGAS update. Overall, GFS 12z Ensemble is bearish vs today’s 00z results (-7 bcf) and is bearish vs Friday's 12z results (-13 bcf). Overall, ECMWF 12z is relatively neutral vs today’s 00z results (+2 bcf) but is bearish vs Friday's 12z (-12 bcf). Dry gas production is currently estimated at 102.0 bcf/d (-1.6 bcf/d from Friday).
EIA REPORT
• My projection for today's EIA report is below the market consensus – meaning that I expect a smaller build relative to the market expectations – which implies a possibility for a “bullish surprise”. However, any surprise is possible.
• Reuters survey: +27 bcf
• Bluegold Trader: +16 bcf (South Central: -5 bcf)
• LSEG: +21 bcf
• Gelber & Associates: +24 bcf
• DTN: +30 bcf
• NGI: +20 bcf
• My projection for today's EIA report is below the market consensus – meaning that I expect a smaller build relative to the market expectations – which implies a possibility for a “bullish surprise”. However, any surprise is possible.
• Reuters survey: +27 bcf
• Bluegold Trader: +16 bcf (South Central: -5 bcf)
• LSEG: +21 bcf
• Gelber & Associates: +24 bcf
• DTN: +30 bcf
• NGI: +20 bcf
OPEC+ agrees to delay October oil output hike for two months
• Move comes amidst falling prices on weak economic outlook
• Output hike of 180,000 bpd had been due to proceed in October
• OPEC+ holds full meeting on Dec. 1, panel meeting on Oct. 2
• Rewrites throughout with OPEC statement
OPEC+ has agreed to delay a planned oil output increase for October and November, the producers group said on Thursday after crude prices hit their lowest in nine months, adding that it could further pause or reverse the hikes if needed.
Oil prices have been falling along with other asset classes on concerns about a weak global economy and soft data from China, the world's biggest oil importer. O/R
Eight members of OPEC+, which is made up of the Organization of the Petroleum Exporting Countries and allies led by Russia, that had been scheduled to raise output from October held a virtual meeting on Thursday, OPEC said in a statement.
"The eight participating countries have agreed to extend their additional voluntary production cuts of 2.2 million barrels per day for two months until the end of November 2024," OPEC said.
The news lifted oil prices by over $1 a barrel, with Brent futures LCOc1 trading over $74 before paring gains. It fell to its lowest this year on Wednesday.
OPEC+'s planned October hike was for 180,000 bpd, a fraction of the 5.86 million bpd of output it is holding back, equal to about 5.7% of global demand, to support the market due to uncertainty about demand and rising supply outside the group.
Last week, OPEC+ was set to proceed with the increase. But fragile oil market sentiment over the prospect of more supply from OPEC+ and an end to a dispute halting Libyan exports, coupled with a weakening demand outlook, raised concern within the group, sources said.
OPEC+ ministers hold a full meeting of the group to decide policy on Dec. 1. A group of top OPEC+ ministers called the Joint Ministerial Monitoring Committee that can recommend changes gathers on Oct. 2.
A dispute between rival factions in OPEC producer Libya over control of the central bank that led to a loss of at least 700,000 bpd of production has supported oil in recent weeks.
Prices, however, slumped by about 5% on Tuesday on news that a possible deal to resolve the conflict was in the works, although no deal on resuming exports has been announced.
Weak Chinese demand and a slump in global refining margins which could prompt refiners to process less crude, have also weighed.
RBC Capital analyst Helima Croft said in a note that it may be prudent for OPEC+ to wait until December before returning extra barrels.
The planned October increase was set to come from the eight OPEC+ members who had agreed in June to start unwinding the cut of 2.2 million bpd - the group's most recent layer of output cuts - from October 2024 to September 2025.
OPEC's statement on Thursday said after the end of November, this cut will be gradually phased out on a monthly basis starting on Dec. 1 until November 2025, "with the flexibility to pause or reverse the adjustments as necessary."
The remaining OPEC+ cuts of 3.66 million bpd, agreed in earlier steps, are staying in place until the end of 2025.
• Move comes amidst falling prices on weak economic outlook
• Output hike of 180,000 bpd had been due to proceed in October
• OPEC+ holds full meeting on Dec. 1, panel meeting on Oct. 2
• Rewrites throughout with OPEC statement
OPEC+ has agreed to delay a planned oil output increase for October and November, the producers group said on Thursday after crude prices hit their lowest in nine months, adding that it could further pause or reverse the hikes if needed.
Oil prices have been falling along with other asset classes on concerns about a weak global economy and soft data from China, the world's biggest oil importer. O/R
Eight members of OPEC+, which is made up of the Organization of the Petroleum Exporting Countries and allies led by Russia, that had been scheduled to raise output from October held a virtual meeting on Thursday, OPEC said in a statement.
"The eight participating countries have agreed to extend their additional voluntary production cuts of 2.2 million barrels per day for two months until the end of November 2024," OPEC said.
The news lifted oil prices by over $1 a barrel, with Brent futures LCOc1 trading over $74 before paring gains. It fell to its lowest this year on Wednesday.
OPEC+'s planned October hike was for 180,000 bpd, a fraction of the 5.86 million bpd of output it is holding back, equal to about 5.7% of global demand, to support the market due to uncertainty about demand and rising supply outside the group.
Last week, OPEC+ was set to proceed with the increase. But fragile oil market sentiment over the prospect of more supply from OPEC+ and an end to a dispute halting Libyan exports, coupled with a weakening demand outlook, raised concern within the group, sources said.
OPEC+ ministers hold a full meeting of the group to decide policy on Dec. 1. A group of top OPEC+ ministers called the Joint Ministerial Monitoring Committee that can recommend changes gathers on Oct. 2.
A dispute between rival factions in OPEC producer Libya over control of the central bank that led to a loss of at least 700,000 bpd of production has supported oil in recent weeks.
Prices, however, slumped by about 5% on Tuesday on news that a possible deal to resolve the conflict was in the works, although no deal on resuming exports has been announced.
Weak Chinese demand and a slump in global refining margins which could prompt refiners to process less crude, have also weighed.
RBC Capital analyst Helima Croft said in a note that it may be prudent for OPEC+ to wait until December before returning extra barrels.
The planned October increase was set to come from the eight OPEC+ members who had agreed in June to start unwinding the cut of 2.2 million bpd - the group's most recent layer of output cuts - from October 2024 to September 2025.
OPEC's statement on Thursday said after the end of November, this cut will be gradually phased out on a monthly basis starting on Dec. 1 until November 2025, "with the flexibility to pause or reverse the adjustments as necessary."
The remaining OPEC+ cuts of 3.66 million bpd, agreed in earlier steps, are staying in place until the end of 2025.
There is a 90% chance of cyclone formation in the Western Gulf of Mexico.
In the week ending Sep. 3, large speculators (leveraged funds and money managers) cut their net-long positions in ICE Brent #oil futures and options by 38,427 contracts. Short-term and long-term indices indicate that the short (sell) side of the trade in Brent is "overcrowded". Traders would normally look for opportunities to go long when indices are close to zero.
Storm Francine
• U.S. Gulf of Mexico oil and gas producers were evacuating staff and curbing drilling to prepare for Tropical Storm Francine on Monday as it churned through the energy region on a path to bring high winds and drenching rains to the U.S. mid-South.
• Francine is moving toward U.S. Gulf of Mexico waters and predicted to become the fourth hurricane of the Atlantic season, which ends Nov. 30. Francine could become a Category 1 hurricane with winds of up to 85 mph (137 kph), ahead of landfall on the Louisiana coast on Wednesday evening, the National Hurricane Center said.
• It is likely to bring life-threatening storm surge to the upper Texas and Louisiana coasts and hurricane-force winds to Southern Louisiana this week. Residents of Calcasieu Parish in Louisiana on Monday were supplied with sandbags and other materials to combat the expected storm surge, officials said.
• The storm's path would put U.S. oil and gas producing facilities and liquefied natural gas (LNG) export plants at risk. U.S. Gulf of Mexico federal offshore waters account for about 15% of total U.S. crude oil and 2% of its natural gas production.
• U.S. crude oil prices on Monday rose 1.5% after falling to multi-month lows last week on worries the storm could disrupt production and refining along the Gulf Coast.
• Exxon Mobil said it shut-in output and evacuated staff from its Hoover offshore production platform. Shell said it was evacuating non-essential personnel from three offshore oil platforms, and had paused drilling operations at two others.
• Chevron is evacuating non-essential staff from four offshore platforms, but production remains at normal levels, a spokesperson said. BP said it was not expecting major impacts to its Gulf facilities. Occidental Petroleum said it was prepared to implement storm plans as appropriate.
• Heavy rainfall and the risk of flash flooding is expected from far northeast Mexico to ports of the Texas coast, southern Louisiana and southern Mississippi, the NHC said.
• The U.S. Coast Guard has imposed restrictions for vessel navigation in some Texas ports, including the port of Corpus Christi and Freeport, which handle oil imports and exports. The ports of Houston and Galveston in Texas, and New Orleans in Louisiana, were open to vessel traffic on Monday. The deepwater Louisiana Offshore Oil Port (LOOP) was operating in normal conditions.
• Freeport LNG, which operates the nation's second-largest LNG export plant, said it had begun storm preparations without providing details. Port of Freeport, Texas, said it was open to commercial traffic, but vessels must report movements.
• Texas officials called on residents to prepare for tropical storm conditions with "the potential to bring flash flooding threats and heavy rain," Texas Land Commissioner Dawn Buckingham said.
• U.S. Gulf of Mexico oil and gas producers were evacuating staff and curbing drilling to prepare for Tropical Storm Francine on Monday as it churned through the energy region on a path to bring high winds and drenching rains to the U.S. mid-South.
• Francine is moving toward U.S. Gulf of Mexico waters and predicted to become the fourth hurricane of the Atlantic season, which ends Nov. 30. Francine could become a Category 1 hurricane with winds of up to 85 mph (137 kph), ahead of landfall on the Louisiana coast on Wednesday evening, the National Hurricane Center said.
• It is likely to bring life-threatening storm surge to the upper Texas and Louisiana coasts and hurricane-force winds to Southern Louisiana this week. Residents of Calcasieu Parish in Louisiana on Monday were supplied with sandbags and other materials to combat the expected storm surge, officials said.
• The storm's path would put U.S. oil and gas producing facilities and liquefied natural gas (LNG) export plants at risk. U.S. Gulf of Mexico federal offshore waters account for about 15% of total U.S. crude oil and 2% of its natural gas production.
• U.S. crude oil prices on Monday rose 1.5% after falling to multi-month lows last week on worries the storm could disrupt production and refining along the Gulf Coast.
• Exxon Mobil said it shut-in output and evacuated staff from its Hoover offshore production platform. Shell said it was evacuating non-essential personnel from three offshore oil platforms, and had paused drilling operations at two others.
• Chevron is evacuating non-essential staff from four offshore platforms, but production remains at normal levels, a spokesperson said. BP said it was not expecting major impacts to its Gulf facilities. Occidental Petroleum said it was prepared to implement storm plans as appropriate.
• Heavy rainfall and the risk of flash flooding is expected from far northeast Mexico to ports of the Texas coast, southern Louisiana and southern Mississippi, the NHC said.
• The U.S. Coast Guard has imposed restrictions for vessel navigation in some Texas ports, including the port of Corpus Christi and Freeport, which handle oil imports and exports. The ports of Houston and Galveston in Texas, and New Orleans in Louisiana, were open to vessel traffic on Monday. The deepwater Louisiana Offshore Oil Port (LOOP) was operating in normal conditions.
• Freeport LNG, which operates the nation's second-largest LNG export plant, said it had begun storm preparations without providing details. Port of Freeport, Texas, said it was open to commercial traffic, but vessels must report movements.
• Texas officials called on residents to prepare for tropical storm conditions with "the potential to bring flash flooding threats and heavy rain," Texas Land Commissioner Dawn Buckingham said.