Your Daily Energy Report for August 28, 2024
Posted on 2024-08-28
Crude Oil
Crude Oil futures for October settled down -$1.01 or -1.337% at $74.52. Oil prices closed down on Wednesday following a smaller-than-anticipated decrease in U.S. crude inventories and persistent worries about Chinese demand. However, losses were limited by concerns about supply disruptions in the Middle East and Libya. According to the EIA, U.S. crude stockpiles fell by 846,000 barrels to 425.2 million barrels last week, which was below the expected draw of 2.3 million barrels. Refining activity increased during the same period. In Libya, multiple oilfields have ceased production due to an ongoing dispute between rival government factions over control of the central bank and oil revenue, jeopardizing about 1.2 million barrels per day of output. Additionally, over the weekend, Israel and Hezbollah exchanged rocket fire across the Lebanese border, contributing to ongoing geopolitical tensions that are keeping global crude oil prices volatile.
Natural Gas
Natural Gas futures for September settled up $.026 or 1.336% at $1.93. Natural gas prices are slightly up following a recent series of declines. Concerns arise as the September contract approaches expiration today, particularly regarding the rate at which the significant surplus in inventory is diminishing heading into the low-demand shoulder season. Weather patterns are also playing a role in the market's current weakness. While there is strong demand from the power sector due to unusually high temperatures in the upper Midwest, this demand spike is expected to be brief given the late August timing. Furthermore, the market faces bearish pressure from substantial coal stockpiles, which indirectly impact natural gas prices. Analysts stated that long-term commitments to coal under take-or-pay contracts may prompt economically unfavorable decisions.