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Cross Asset Note
Crude is heading for a third straight weekly gain as attacks on Saudi Arabia widen. Houthi militants claimed this week’s strikes on the Red Sea export port at Yanbu and the deadly attacks on a Saudi oil field and airport, and Aramco evacuated its Dhahran headquarters Thursday after an alarm. Brent is near $114, up almost 4% on the week and more than 85% this year. The tone out of Washington has hardened. The president said the US has already hit Iran hard and threatened to go further, reports point to plans for renewed strikes after next month’s midterms, and the US ambassador to the UN said the country is preparing for a conflict that could still be a stalemate a year from now, with the naval blockade of Iranian ports able to run indefinitely. Gulf crude exports have recovered to near prewar levels, but refined products remain constrained, and Ukrainian strikes on Russian refineries keep diesel tight. There’s a split inside the market, though. Futures are rallying while physical barrels have softened, and sky-high tanker rates are pricing US crude out of Asian markets, which makes this rally look driven more by risk premium than by barrels changing hands. In nat gas, we’ve rolled to the December contract. Thursday’s EIA report showed a 77 bcf build against an 87 bcf five-year average, the latest in a run of below-average injections, and the storage surplus over normal has narrowed to 1%. Still, forecasts call for above-normal temperatures across the Midwest and East into early November, and production is running more than 5% above last year, so the market is looking past the storage tightening for now. Overseas demand keeps building: European traders are already drawing on low winter storage, Asian buyers are chasing cargoes at elevated prices, and Qatar agreed to buy US LNG through 2054. For clients, crude carries real gap risk over the weekend in both directions, so position size matters more than conviction heading into Friday’s close. In nat gas, the storage math is tightening while the weather and production keep the pressure on, a combination that can turn quickly once real cold shows up.
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CRUDE OIL (December, CLEZ26)
Current Price: $101.13, up $1.65 (1.66%) | Session high $101.30, low $98.84
Chart Setup
December is trading back above the upper edge of the rising channel near $100.05, with a high of $101.30, just under Tuesday’s $101.35 and the April front-month high at $101.40. Thursday’s $99.47 settle was the highest close of the move, and the lows have risen every session since Tuesday’s $95.18 spike low. Price is up about $2.10 on the week and roughly $8 above the rising 20 day at $93.02, with the 50 day at $88.79. Five prior pushes above the channel edge failed to hold on a settlement, so today’s close carries extra weight into the weekend.
Key Levels Above
- $101.40 (April high on the front-month chart)
- $101.35 (Tuesday high, with today’s high at $101.30)
Current Price: $101.13
Key Levels Below
- $100.09 (Thursday high, with the channel edge near $100.05)
- $99.47 (Thursday settle)
- $98.84 (today’s low)
- $97.72 (Thursday low)
- $97.15 (Wednesday settle)
Bias
Thursday’s $99.47 settle is the level to manage against. A settlement above the channel edge today would be the first weekly close outside the channel. A settlement through $101.40 would put December in new territory on the front-month chart, with nothing overhead on this contract. A settlement back below $99.47 would make this the sixth failed push at the channel edge and opens $97.72, then $97.15. For sidelined traders, buying near the highs into a weekend full of headline risk leaves no room for error. A pullback that holds near $100.05 offers defined risk, with a stop under $99.47.
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NATURAL GAS (December, NGEZ26)
Current Price: $3.13, down $0.02 (0.73%) | Session high $3.16, low $3.10
Chart Setup
We’ve rolled to December, which trades about 35 cents over November, so all levels reset. December broke below its early October low at $3.24 on Wednesday and set a new contract low of $3.10 this morning. Thursday’s bounce stalled at $3.21, and today’s high stopped at Thursday’s $3.16 settle. All four averages are overhead, and the 20 day at $3.39 sits below the 50 day at $3.45, keeping the short-term trend pointed lower. The mid-October highs leave a heavier supply area between $3.53 and $3.66. There’s no prior history on the December chart below current prices.
Key Levels Above
- $3.39 (20 day)
- $3.33 (Wednesday high)
- $3.24 (early October low, broken Wednesday)
- $3.21 (Thursday high)
- $3.16 (Thursday settle, today’s high)
Current Price: $3.13
Key Levels Below
- $3.10 (today’s low, new contract low)
Bias
The broken early October low at $3.24 is the level to manage against, now from below. A settlement back above it would turn Wednesday’s breakdown into a failed move and could bring short covering toward $3.33 and the 20 day at $3.39. As long as December settles below $3.16, the breakdown stays in control. A settlement below $3.10 extends the move into new contract lows with no chart reference underneath. For sidelined traders, shorting at the lows into a weekend, after a sharp drop with funds already heavily short, offers poor risk. A settlement back above $3.24 is the first sign that sellers are losing control.
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