Morning Market Overview
Oil futures nearest to delivery on the New York Mercantile Exchange and the front month Brent contract on the Intercontinental Exchange settled mixed, fading from tropical storm-induced short covering highs in post- Labor Day trade, with Tropical Storm Gordon not seen causing long-lasting supply disruptions while worry over a slowdown in global economic growth heightened.
Tropical Storm Gordon is forecast to make landfall tonight as a Category 1 hurricane along the north-central Gulf Coast—somewhere between eastern Louisiana and western Florida. The Bureau of Safety and Environmental Enforcement reported about 9% of oil production in the Gulf of Mexico was shut-in by the storm, shutting-in nearly 157,000 bpd of oil.
Oil futures faded from the highs reached in early morning trading, with Tuesday’s NYMEX session beginning 6 PM ET Sunday. ICE Brent traded Monday. Oil futures ended August near highs on heightened concern over declining Iranian oil exports due to U.S. sanctions, with lost Iranian oil availability dovetailing with flagging production in Venezuela. A ship accident at Venezuela’s oil export facility in the Caribbean in late August also reduced shipping capacity at the facility. NYMEX October West Texas Intermediate futures settled up $0.07 at $69.87 bbl, sliding from a $71.40 nearly eight-week high on the spot continuation chart. ICE November Brent futures settled up $0.02 at $78.17 after trading at a $79.72 nearly 3-1/2 month high on the spot continuous chart.
NYMEX October ULSD futures spiked to a $2.3093 gallon 3-1/2 year on the spot continuous chart following Friday’s expiration of the September contract. NYMEX October RBOB futures settled down 0.28cts at $1.9942 gallon, carving out a 4.52cts gap on the spot continuous chart with a $2.0624 intraday high following Friday’s expiration of the September contract. September RBOB futures expired at $2.1437 gallon. The steep differential between the delivery months reflect the end of peak driving demand during the summer months and change to winter fuel specifications that are less expensive to produce.