Looking to the Futures
The Cow is Cautious Amid the Headlights of Government Shutdown
Crude oil futures (/CLX25) ended Friday’s session higher, but for the week prices fell by over $4 per barrel in the front month West Texas Intermediate (WTI) futures contract.
The recent oil price recovery succumbed to traders’ concerns that recently announced OPEC+ crude production increases will raise global oil supplies at the same time global demand is expected to stagnate, which could potentially lead to an oil supply glut going into 2026.
In its Weekly Petroleum Status Report, the Energy Information Administration (EIA) said crude oil stockpiles increased by 1.8 million barrels during the week ending September 26. This was above expectations for a 1.5 million barrel build.
U.S. oil production increased by 4,000 barrels per day last week and averaged 13.505 million barrels per day. This was 205,000 barrels higher than one year ago.
On the oil product side, distillate inventories increased by 600,000 barrels, which was contrary to expectations for a 1million barrel draw. Distillate inventories are now 6% below the five-year average for this time of year.
Gasoline inventories rose by 4.1 million barrels, which was well above expectations for a 500,000 barrel build. These stockpiles are now equal to the five-year average.
EIA said gasoline production decreased from the previous week and averaged 9.3 million barrels per day. Distillate production decreased slightly last week, averaging 5 million barrels per day.
The agency also reported that U.S. ethanol production decreased last week, averaging 995,000 barrels per day. Expectations were for 1.01 million barrels per day.
U.S. ethanol inventories fell to 22.8 million barrels last week. Traders were expecting inventories of 23 million barrels.
Digging further into the EIA report, refinery utilization decreased by 1.6 percentage point to 91.4% last week. Expectations were for a decline to 92.5%. U.S. gasoline demand fell by 440,000 barrels per day to 8.518 million barrels per day. Distillate demand also declined last week, falling by 121,000 barrels per day to 3.617 million barrels per day.
Oil inventories, excluding the Strategic Petroleum Reserve, stood at 416.5 million barrels, 4% below the five-year average.
Oil storage in Cushing, Oklahoma, the delivery point for the WTI Crude Oil futures (/CL) contract, fell by 200,000 barrels last week to 23.5 million barrels.
The U.S. crude oil rig count rose by six and now total 424 rigs during the week ending September 26. That’s down 12.4% from a year ago according to energy services firm Baker Hughes’ North American Rotary Rig Count report.
This morning, U.S. stock index futures moved higher in the early hours with the S&P 500® (+0.28%), the Nasdaq-100® (+0.57%), the Russell 2000® (+0.52%), and Dow Jones Industrial Average® (+0.20%) all in the green.
In Asia, major indexes closed mixed, with the Nikkei (+4.75%) higher but the Hang Seng (–0.67%) lower. The Shanghai was closed for a market holiday.
European trading saw the DAX (+0.24%) and the FTSE (+0.12%) markets move higher, but the CAC (–1.26%) trade lower by midday.
Futures on the move
Natural gas futures (NGX25) ended Friday’s trading session in the red (–3.43%) as bullish gas traders reduced long positions after the lead month November futures traded at two-month highs on Thursday.
The U.S. Energy Information Administration (EIA) reported U.S. natural gas inventories rose by 53 billion cubic feet (Bcf) during the week ending September 26. This was well below market expectations of a 67 Bcf build. U.S. gas inventories are currently 5% above the 5-year average and 0.6% above last year.
In addition, the National Weather Service Climate Prediction Center is forecasting above normal temperatures from October 9th to October 15th for areas east of the Rocky Mountains to the Atlantic Ocean during this time period.
This continued warm weather forecast could see increased natural gas usage for cooling needs.
Gold futures (/GCZ25) closed higher on Friday (+1.05%), ending the week just below all-time highs made on Thursday. Gold found some buying interest going into the weekend as the U.S. government shutdown shows no immediate signs of ending. In addition, weakness in the U.S. dollar index on Friday provided some support for the precious metals complex.
Cocoa futures (/CCZ25) closed lower on Friday (–4.49%), with the lead month December contract trading near one-year lows. The historic bull market for cocoa, which took prices near the $13,000 per ton level in December has ended as prices are now down over 50% from these historic highs. Concerns of slowing cocoa demand and reports of increase cocoa supplies out of Ghana, the world’s second largest cocoa producing nation, have been bearish catalysts.
What else to watch today
Today’s trading events
Futures First Notice Day: October Live Cattle
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