Market Insights > First Look

First Look - Hurricane Helene makes landfall, knocking out power to millions

Oil is trading slightly lower and heading for a weekly loss
- WTI prices are down more than $3/Bbl this week, as bearish factors have weighed on prices
- Despite aggressive Chinese stimulus, concerns of oversupply from OPEC’s plan to bring production back have pushed prices lower
Oil’s record bearishness shows the market is increasingly influenced by speculators (BBG)
- Speculators or managed money in Brent futures flipped to being net-short for the first time since at least 2011
- Typically, long positions held by speculators outweigh short positions, but due to recent extreme bearish sentiment that has flipped
- Managed money positioning in WTI, while also at an extreme level, remains net-long
- The extreme positioning raises the risk of a sharp unwind if prices begin to rise and traders are forced to cover their short positions

The now prompt November contract rose 8.3c to $2.84/MMbtu Friday morning (8:10 AM CT)
- October rolled off the board at $2.585 on Thursday
- Also, on Thursday, the EIA reported a 47 Bcf injection into underground storage
- The NHC is tracking two new disturbances in the Atlantic, including one in the Caribbean
- Hurricane Helene made landfall in Western Florida as a Category 4 storm
The EIA reported a 47 Bcf build in working gas, but it also came with a correction
- Most analysts were estimating closer to a 54 Bcf build, which is really what the injection was due to an EIA correction
- The implied flow was a 55 Bcf build for Thursday’s number as the EIA corrected the previous weekly injection by reducing working gas in the South Central region by 8 Bcf
- Even with the correction, our weather-adjusted supply-demand model shows gas is still 4.5 Bcf/d tight relative to the three-year average
Helene made landfall in the Florida panhandle, knocking out over 2 MM electric customers
- Gulf of Mexico production was down to 1.5 Bcf/d versus the prestorm amount of 2.2 Bcf/d as platforms were evacuated
- This supply should come back relatively quickly as crews return