Energy Futures Mixed As Market Mulls Opposing Opinions On Middle East Conflict

Energy futures are mixed today as the market mulls opposing opinions on the possibility of widespread conflict in the Middle East. Oil prices were drifting lower earlier this morning as headlines touted a cooling in war sentiment, only for reports to come in about Israeli special forces conducting raids in Lebanon. November heating oil futures (October contract expires today) are leading the way, trading just over .5% ahead of the 8 am formal open.

The death toll from Hurricane Helene has reached 90+ as of this morning, with rescue workers searching for dozens more missing. So far, outside of terminal-specific closures, the only major impact on energy infrastructure was the closure of a handful of offshoot pipelines in Atlanta GA, Belton SC and North Augusta SC. Colonial announced service had been restored to the Atlanta stublines, but are continuing to work on those in South Carolina.

The National Hurricane Center is now tracking 5 areas of interest in the Atlantic basin. Tropical storm Isaac and tropical depression Joyce are expected to continue moving North out in the open ocean until they dissipate. Depression Twelve is expected to be named Kirk shortly and is projected to be another major hurricane, but it won’t likely make landfall as it hooks to the North. The system that looks the most threatening to refining country currently has a 40% chance of development over the next 7 days, where it seems like it will hop over the Yucatan peninsula and into the warm waters of the Gulf of Mexico.

Money managers continued the short covering featured in last week’s Commitment of Traders report. They punctuated their bullish sentiment by adding fresh long positions, leading to a 21.5% increase in their net position. Contrarian play or ‘believe it when I see it’? Last week Saudi announced they are considering abandoning their $100 price target, in what some would call a shot across the bow in a price war for market share.

Baker Hughes reported a drop in total oil production platforms last week of 4 to 484, 2 of which were in the Permian. Natural gas rigs increased by 3 to 99.