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Oil prices took a big hit yesterday after attempting to break out on Friday. The sell-off was intensified by a combination of end-of-the-month profit-taking, reports over the weekend of an increase in OPEC quotas, and another report of increases in the coming months. Bloomberg is reporting that OPEC+ is to discuss fast tracking its latest round of supply hikes in three monthly installments of about 500,000 barrels a day as it seeks to recoup market share. We also had the resumption of Kurdistan’s exports from Iraq, and now the potential for a peace deal engineered by President Trump between Israel and what’s left of Hamas.

Fox News reported that President Trump was praised for a ‘landmark deal’ as he advocates Gaza peace plan to end war. International relations expert Dr. Rebecca Grant joined ‘Fox & Friends First’ to discuss why she believes Hamas has ‘no options’ other than to accept the Trump-backed Gaza peace deal and the latest on a military meeting at Quantico. Sky News said it was, “Praise and fury for Trump’s Gaza peace deal – but Hamas’s first reaction is telling. Hamas says it can’t sign up to anything that does not include Palestinian self-determination. Which this, pointedly, doesn’t.

Regardless, whenever we get a the pathway to a potential ceasefire in this war it has been bearish for oil prices. At least temporarily the wheels come off the deal but there seems to be a bit of a risk premium. The situation in the Middle East, that could go away, has obviously inspired the rebels to attack shipping lanes earlier in the year. It has encouraged Iran to make significant threats but a peace deal might ease some of those tensions and take away some of the risk premium. That’s not to underplay the reaction due to the OPEC increase but really when you look at that number, it shouldn’t have had that much of a negative impact on prices. #1 it’s not a surprise and #2 it’s not that much oil.

Reuters’ unnamed sources were at it again. They reported over the weekend that OPEC+ plans to boost oil output in October by at least 137,000 barrels per day, continuing September’s increase. This move forms part of OPEC+’s strategy to balance supply and prices amid global uncertainty, maintaining course unless Brent crude drops below $60.00 or spare capacity is depleted. According to sources, OPEC+ will stick with this approach despite economic challenges and slowdowns in major economies, aiming for market stability. For at least until they get more market share from US shale producers who seem to be struggling.

Today it’s Bloomberg reporting that OPEC+ is to discuss fast tracking its latest round of supply hikes in three monthly installments of about 500,000 barrels a day as it seeks to recoup market share, a delegate said.

And let’s not forget about the big deal struck in Iraq. We finally got it—the long-awaited agreement between Iraq’s federal government, the Kurdistan Regional Government (KRG), and the foreign oil majors working the region. This new pact opens the taps for about 180,000 to 190,000 barrels per day (bpd) of crude to start flowing toward Turkye’s Ceyhan port, according to Iraq’s oil minister speaking with Kurdish outlet Rudaw on Friday.

This isn’t just any handshake. It follows a hard-fought triparty agreement earlier in the week, bringing together Baghdad, the KRG’s natural resources ministry, and those international oil companies that have been waiting on the sidelines. The United States had been pushing hard for this restart, and now the expectation is we’ll eventually see as much as 230,000 bpd re-enter global markets—just as OPEC is cranking up the output in their own bid to claw back market share. Or are they just reacting to strong demand?

Regardless, it puts us back down to the lower end of the trading range of $61.00. Traditionally we shouldn’t get a bounce from that area as we are in shoulder season so the moves can get a little bit weaker. Call me t 888-264-5665 to learn more about shoulder season.

Natural gas is getting some support as Jodi Shafto from Natural Gas Intelligence reports that November natural gas futures rebounded Monday, turning early losses into afternoon gains as traders bet that shifting weather patterns could boost demand and tighten the supply/demand balance. Natural Gas Intelligence reports that its storage estimate lags behind the five-year average, as power demand remains high. NGI forecasts a 64 Bcf injection for the week ending Sept. 26, which is 11 Bcf lower.

Natural gas demand for this winter is projected to reach record levels due to increased exports and growing interest in artificial intelligence. Current weather conditions may provide some support to prices. Fox Weather is monitoring these developments closely.

Fox Weather reports Hurricane Imelda has strengthened in the Atlantic and is impacting the U.S. coast with large waves and dangerous rip currents. Forecasters expect the storm to continue sending massive waves onshore. As of the latest advisory from the NHC, Hurricane Imelda is currently located about 750 miles west-southwest of Bermuda and was moving off to the northeast at 7 mph. The good news is that Hurricane Imelda isn’t forecast to make landfall in the U.S., but impacts from the storm will be experienced from Florida to the Northeast as the hurricane moves farther away from the coast.

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