Malcolm Graham-Wood
Independent Analyst
Last week both WTI and Brent lost around $2.50 with crude stocks increasing and products holding their own. The strength of the greenback in the last day or two hasn’t helped and the rate cut in China didnt help commodity markets much. The rig count was very modest, unchanged overall and minus one in oil is hardly going to light any fires, although evidence appears to be showing more falls. Net speculative length positions fell again last week by 13,841 contracts indicating little optimism from the hedgies. It is worth noting that NG fell sharply again on Friday and is heading back to $2.
I said last week that the end of October is an important time in the US market, refinery maintenance should be complete and they will be prepared for the first of the cold weather and sales of heating oil. If that is correct then maybe, just maybe, we might see a modest pick up in demand and perhaps a stock build before long. Certainly it is worth looking at the offline capacity numbers which have fallen by a million barrels since the beginning of the month to the end of last week.
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