Oil prices fell further yesterday, with ICE Brent dropping over 1.4% and NYMEX WTI closing below $70 per barrel for the first time since December. This decline persists despite reports that OPEC+ may delay its planned supply increase for October. The primary concern remains persistent demand issues, overshadowing any potential delay in supply. If OPEC+ does delay, the key question will be how long the delay will last. Given that the oil market is expected to be in surplus through 2025 (assuming supply increases), extending current cuts into 2025 might be prudent.
The API reported a constructive update, indicating a 7.4 million barrel drop in US crude oil inventories over the past week. Refined products also saw small declines, with gasoline and distillate inventories down by 300,000 barrels and 400,000 barrels, respectively. The EIA will release weekly data later today; a similar decline would mark the largest weekly drop since late June.
European natural gas prices also continued to fall, with TTF dropping 3.75% to EUR 35.80 per MWh, a level last seen in early August. This decline occurs despite ongoing maintenance in Norway and a recent significant reduction in North African pipeline flows into Italy. However, storage levels are nearly 93% full, and LNG flows into Europe are recovering from August lows. GIE data shows that LNG send-outs in Europe have reached their highest level since May.