Oil prices got crushed at an end of the quarter, holiday-thinned market. Weak global manufacturing numbers, as well as claims by Saudi Aramco that production is restored, found the oil market lacking a bid. A run to the dollar was a safe haven that despite the impeachment push by bitter and off-balanced Democrats, the U.S. economy is still the best in the world.

Crude oil had its worst quarter in a year as growth fears in Europe added to negative sentiment. Eurozone purchasing managers index data fell to 45.6 in September, its lowest level since 2012. Spain, Italy, France and Germany are all showing manufacturing in contraction. Germany is seeing its worst contraction since the 2009 financial crisis. Yet this morning UK Manufacturing beat with their PMI hitting 48.3, better than the 47.0 forecast but still in contraction.

Yet as the new quarter beckons we are seeing more signs of OPEC production restraint as well as signs that U.S. oil output might sputter. Reuters reports that, "Organization of the Petroleum Exporting Countries fell to the lowest in eight years in September at 28.9 million bpd, down 750,000 bpd from August’s revised figure and the lowest monthly total since 2011, a Reuters survey found. Output at the world’s two largest producers, the United States and Russia, also fell in July and September respectively." Reuters reports that "Russia’s output declined to 11.24 million bpd in Sept. 1-29, down from 11.29 million bpd in the previous month, sources said", although it is still above the quotas set in an output deal between Russia and OPEC.

Even U.S. production fell. Reuters show that U.S. crude oil output fell 276,000 bpd in July to 11.81 million bpd as federal offshore Gulf of Mexico production slid, according to a U.S. Energy Information Administration monthly report released on Monday. U.S. production peaked at 12.12 million bpd in April.

We may also get a surprise draw in crude supply. While the Reuters survey is showing a likely 1.1 million barrels of crude supply increase, our contacts and data are suggesting a larger draw. We will get our first take on inventory tonight with the American Petroleum Institute report. If we are right it should help oil recover.

Natural gas is still under pressure as supply is 16% higher than a year ago and U.S. production continues to break records.

AAA reports that “Two weeks after attacks on major Saudi Arabian oil facilities, the majority of Americans are starting to see signs of gas prices trending cheaper. While the national average may have only decreased by a penny on the week, 10 states saw pump prices decline by a nickel or more.” “Crude oil prices have dropped close to where they were right before the drone attacks on the Saudi oil facilities,” said Jeanette Casselano, AAA spokesperson. “This is helping to push gas prices cheaper in most of the country. Americans can expect this trend to continue, except for that filling-up on the West Coast, where refinery disruptions are causing spikes at the pump.” On the week, all West Coast region states saw prices increase with California (+28 cents) seeing the largest spike, which drives the state average to $4.02 and is likely to push more expensive this week. Today’s national gas price average of $2.65, which is the same price as last week, is seven cents more expensive than last month but 22-cents cheaper than a year ago.