Natural Gas, WTI Oil, Brent Oil – Oil Markets Rally After EIA Report

Key Insights

• Natural gas tested new lows as demand remained weak. 
• WTI oil rallied as traders shrugged off the significant increase in crude inventories. 
• Brent oil moved higher as Russia may cut oil production to reduce the discount on its Urals oil. 

Natural Gas

Natural gas  continues to trade near multi-month lows as demand stays weak. Weather models point to a colder trend towards the end of the month, but natural gas markets will clearly need additional catalysts to rebound from current levels.

WTI Oil

WTI oil moved higher after the release of the EIA report. Crude inventories increased by 19 million barrels from the previous week, while domestic oil production grew by 200,000 bpd. Both numbers are bearish for oil markets, but traders focused on the U.S. strategic reserve, which fell to 1983 lows. The U.S. will ultimately have to buy oil to refill reserves, which will provide support to oil markets.

Brent Oil

Brent oil also gained strong upside momentum and settled above the $82 level. Russia plans to take measures in order to reduce the discount on its Urals oil. Russia’s options are limited in the near term, so the country may be ready to cut oil production, which be bullish for oil prices.

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