Oil prices can’t shake the virus. Reports that U.S. coronavirus cases jumped over 45.000 in one day in the U.S. and deaths reached 900 turned slightly optimistic market sentiment into a more negative mood. In the U.K.. they are reporting an average of 9600 new cases a day. In the most recent week, the U.K. said they had an estimated 103,600 people with the virus. The reports are damaging not only growth expectations but also the demand expectations for oil.

Still, oil is hanging in a tight trading range. The continuing tightening of U.S. oil investors, especially gasoline, should start raising some eyebrows. Simultaneously, one could no doubt argue that we have a glut of distillate, as, for gasoline, the supply is just 1% above the five-year average and looks to fall below average in the coming weeks. That's reducing gasoline demand once again.

So what is a refiner to do? Should they ramp up gasoline production if they fear demand might get locked down by the virus? Or do they risk a gas price squeeze and a spike in gasoline and RBOB prices? I think they will play it cautious and that means they will risk a price spike.  

Natural gas is popping. Not only do we have cooling demand, but we also have heating demand and the possibility that Old Man Winter will start to rear his ugly head in October. Accuweather is calling for an Arctic Blast in October for a big part of the country, so get those jackets out and ride the natural gas. Reuters reported that U.S. natural gas futures jumped 5% on Thursday as output continues to slide while liquefied natural gas exports rise. That price increase came ahead of a report expected to show a near-normal storage build last week. Analysts said U.S. utilities injected 78 billion cubic feet (bcf) of gas into storage in the week ended September 18. That compares with an increase of 97 bcf during the same week last year and a five-year(2015-19) average build of 80 bcf. If correct, the increase would bring stockpiles to 3.692 trillion cubic feet (tcf), 12.8% above the five-year average.

The market has already been extremely volatile this week - prices fell over 10% on Monday and jumped over 16% on Wednesday - as traders roll out of front-month October contracts, which expire on September 28, and into much higher priced November futures. Data provider Refinitiv said output in the Lower 48 U.S. states was on track to fall for the second month in a row to 86.9 billion cubic feet per day (bcfd) in September from 87.5 bcfd in August. Refinitiv projected demand, including exports, would rise from 82.6 bcfd this week to 85.3 bcfd next week as LNG exports rise. The amount of gas flowing to LNG export plants was on track to rise to 5.7 bcfd on Thursday from a two-week low of 3.9 bcfd on Tuesday as vessels returned to Gulf Coast terminals after Tropical Storm Beta dissipated. The Army Corps of Engineers has said it plans to finish dredging the Calcasieu Ship Channel in the second week of October, which traders said should allow Cameron LNG to return around that time.