Crude Oil Futures Are Set To Make Second Consecutive Weekly Gains As Conflict Rages On In The Middle East

Crude oil futures are set to make second consecutive weekly gains as conflict rages on in the Middle East. The Israel-Hamas war will enter its second week tomorrow, and while the two belligerents don’t account for a substantial amount of oil production, the threat of this conflict pulling in large regional producers has kept the market spooked. While not a regional producer, the US made its presence known late Thursday after reportedly shooting down a trio of missiles fired from Yemen towards Israel.

The Department of Energy announced its plans to bring monthly solicitations for crude oil to replenish the Strategic Petroleum Reserve yesterday. The current administration touted the plan as a “good deal for taxpayers”, targeting $79 per barrel after selling its reserves at $95 per barrel back in 2022. Whether or not that price is realistic is yet to be seen, (prompt month WTI is trading above $90 this morning) as is whether or not this is another headfake like we saw back in August.

Diesel in the Midwest, particularly in the Group 3 market, traded +$1 over the NYMEX yesterday as suppliers struggle with fall harvest demand surge. The price blowout is expected to be short lived however, as ULSD deliverable early next week recently traded for a relatively modest $.20 premium to the screen.

The NOAA published its winter forecast yesterday, highlighting their anticipation for above average temperatures for the northern half of the contiguous United States. While this might not seem like news given the blistering summer that just ended, it's definitely welcomed information amongst those that still use heating oil during the winter, particularly in the Northeast. Distillate inventories remain precariously low in that region and a colder-than-average winter could be very costly for residents.

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