Written Commentary
Surprise Drop in Crude Oil Stocks
October 16, 2026
CRUDE OIL
December Crude Oil was slightly lower early Friday but in the upper end of Thursday’s range. Mideast oil flows, which had recovered in September and early October to their highest levels since the war began, have been slowed by increased attacks by Iran on ships in an around the Strait of Hormuz. Iran has widened its strikes to cover more areas outside the strait, ostensibly to go after the ship-to-ship transfers. Ironically, Reuters reports that Iran has managed to export some liquefied petroleum gas and jet fuel since July, despite the US naval blockade, by concealing cargoes among the ship-to-ship transfers being performed by other Gulf producers off the coast of Oman. A surprise drop in crude oil stocks in the EIA report lent support to the market on Thursday. The report showed US crude oil stocks fell 8.6 million barrels for the week ending October 9 versus average expectations going into the report calling for a 300,000-barrel decline.
PRODUCTS
Product prices are under pressure early Friday, especially gasoline. The EIA report on Thursday was mixed, with a gasoline stocks up 3.5 million barrels versus an expected decline of 500,000 and distillates down 2.5 million barrels versus an expected drop of 1.6 million.
NATURAL GAS
December Natural Gas was lower early Friday, slipping back below the 50-day moving average after bursting though there earlier this week. The rally this week took the market to its highest level since September 24 but failed to close the gap from that day, which was a disappointment to the bulls who had been encouraged by a drop in US gas output this month. The selloff occurred despite a supportive EIA report on Thursday, which showed US gas in storage for the week ending October 9 at 3,567 bcf, +67 bcf from the previous week, below the average trade expectation of +76 and below the low end of the range of expectations from +69 to +85.
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