Oil & Gas Prices - Oct 8

[dan_s]

Whiplash: Yesterday we had a short covering rally and today we have the long paper traders closing their positions.

Trading Economics
WTI Oil
"WTI crude oil futures fell over 5% below $73 per barrel on Tuesday by 1PM ET, pausing after a recent rally driven by geopolitical risks in the Middle East. Prices had surged 13% following Iran's missile attack on Israel, raising fears of retaliation against Iran’s oil infrastructure. However, President Joe Biden has discouraged such strikes, likely tempering the market's reaction. Analysts noted that oil prices can't keep rising on speculation without actual supply disruptions. Additionally, the lack of new stimulus measures from China, a major crude importer, also weighed on prices, which had already been affected by soft demand from China."

HH Natural Gas
"US natural gas futures declined slightly to around $2.74/MMBtu as Hurricane Milton approached Florida, raising concerns about potential disruptions to both demand and production. Natgas prices reached a three-month high of $3 level last week but fell sharply ahead of the storm's formation. Hurricane Milton, currently a Category 4, is expected to strengthen and make landfall on Florida’s Gulf Coast midweek, prompting evacuation warnings. Power restoration efforts are still underway following Category 4 Hurricane Helene, with 275,000 customers across the Southeast awaiting service. Despite the storms, national natural gas demand is projected to remain light for the next 15 days. Production levels also stayed low, with output estimated at 101.2 Bcf/d as companies reduced activity in response to weak prices."

MY TAKE: After yesterday oil price rally stalled at around $77/bbl the traders that were long the front month NYMEX contract for WTI tightened up their stop loss orders. When the market opened this morning it took just a few sellers to trigger automated sales of WTI contracts. There are support levels at $73 and $71.