1st trading day in Q4. 

Rough session, lots of emotions...at not fundamental change.

 

WTI was slightly higher in overnight trading helping by 45 days of extension and avoiding US government shutdown.

But started declining when US trading desks opened. 

Selling was basically in the first 2 hrs. After that - not much change. However WTI settled at low.

Technical traders may say - selling will continue. I say - we shall see it first despite breaking down the psychological level of $90.

 

Oil weakness was triggered by several forces:

 

- Profit taking 

 

- Powell and 2 other Fed governors were speaking very hawkish about longer inflation to stay, and higher rates for longer.

 

- Jamie Dimon is expecting rates to rise to 7%

 

- UAE Energy Minister created some noise about his goal of 5mm bpd capacity and 4 mm bpd lost production that will not come back due to low capex. I think he was playing his book. It will come back...not very fast so...(He may sounded about Vz, Iran, Nigeria, Angola).

 

Turkey's Minister Bayraktar added some more false news about Ceyhan pipeline to start later this week. Major obstacles are still not resolved - financial terms of Turkey/Iraq and Iraq/Kurds are far from resolved according to Argus.

We shall see...even if I don't dismiss it to happen.

 

General market mood and poor October seasonality didn't help. Traders have changed the narrative from Friday's "High oil price will not hurt demand" to today's "Risks about recession and inflation".

The earlier narrative of "Cushing is at operational low" was totally forgotten. 

 

Oil equities were even much weaker than oil. Traders were very quick to sell even at slight weakness in oil. 

I still believe we should see estimates bump up shortly unless WTI plunges to $80.

Producers are making tons of money at current prices. Selling wasn't justified.

 

We are at the heart of the maintenance season Should hit the bottom in 2 short weeks 

It is hard to navigate this market in a very short term. Nimble traders can extract profits. Not me. I'm playing large positions along with OPEC/Russia and ABS view.

Added VET materially today.

 

NG settled at  $2.84 down 9c

 

Best wishes,

romm