Oil, natural gas are on different paths. What has been driving the

On Oct 6, 2023

Oil and natural gas prices traveled divergent paths this week, resulting in a mixed picture for the Club stocks Coterra Energy (CTRA) and Pioneer Natural Resources (PXD). Fresh off robust third-quarter gains, crude has tumbled in recent days, sending the U.S. oil benchmark West Texas Intermediate and global oil standard Brent prices to their lowest levels since late August. Both WTI and Brent are on pace for their worst weeks since March on emergent concerns about demand for oil products. WTI dropped 2% on Thursday to settle at $82.31 a barrel. Brent also fell 2%, settling at $84.07 a barrel. On Friday, they bounced — coming off modest earlier declines after the government released much stronger-than-expected September job growth. WTI vs. nat gas this week @CL.1 @NG.1 mountain 2023-09-29 WTI and nat gas since Sept. 29 settle Meanwhile, the rally in natural gas has picked up steam, pushing the commodity to prices not seen since January, at over $3 per million British thermal units, or MMBtu. In Thursday’s session alone, natural gas prices jumped nearly 7%, as traders reacted to U.S. government data that showed a smaller-than-expected storage build. Traders also continue to monitor weather forecasts in search of clues about future demand heading into the winter months in the Northern Hemisphere. For the week, through Thursday’s settle, natural gas has climbed 8.1%, building on last week’s 11% advance. Natural gas on Friday morning jumped another 1.5%. In the oil market, a switch has seemingly been flipped. WTI and Brent rose more than 28% and 27%, respectively, in the third quarter, as major oil exporters Saudi Arabia and Russia cut production at a time when economic activity — and by extension demand for crude – proved more resilient than expected. Now, the market is grappling with the idea that demand might be waning. Those concerns were amplified by U.S. government data Wednesday that indicated gasoline inventories in the week ended Sept. 29 grew by 6.48 million barrels, a much higher increase than expected. WTI and Brent each plunged by 5.6% in Wednesday’s session. For the week, with one trading day to go, WTI and Brent sank more than 9% and nearly 12%, respectively. “The single biggest element of the global oil market is U.S. gasoline. We consume not far off 1 in 10 barrels just in U.S. cars,” veteran energy analyst Paul Sankey said Thursday on CNBC. “When it’s as weak as it came in [Wednesday] and it already been weak the week before, it becomes a major problem in the global oil market.” The magnitude of the sell-off, Sankey said, is linked to the traders who had been rushing into crude during its summertime ascent that continued into September , raising the specter of $100 per barrel oil . Brent traded as high as $97.69 a barrel on Sept. 28 while WTI reached $95.03 on the same day. Recent data has traders looking to reduce their risk, Sankey said. “The speculative interest before this run was very low,” he said. “Our view was that…