A Bit More Optimistic on China

CRUDE OIL 

February Crude Oil is higher this morning as traders has have turned a bit more optimistic on China’s growth prospects. The World Bank raised its forecast for China’s economic growth in 2024 and 2025 yesterday, to 4.9% for 2024 from a previous forecast of 4.8% and to 4.5% in 2025 from a previous forecast of 4.1%. Beijing has set a growth target of around 5% this year. However the World Bank also warned that subdued household and business confidence and headwinds from the property sector would keep weighing on growth potential. This followed reports yesterday that Chinese authorities have agreed to issue 3 trillion yuan ($411 billion) worth of special treasury bonds next year, the largest on record. On the geopolitical front, Finnish authorities yesterday seized a ship carrying Russian oil in the Baltic Sea on suspicion it caused the outage of an undersea power cable connecting Finland and Estonia a day earlier. Israel struck targets linked to the Iran-aligned Houthi movement in Yemen yesterday, including Sanaa International Airport. The EIA report will be released at noon Central Time today, delayed because of the holiday. For the report, the Reuters survey has average expectations calling for crude stocks -1.9 million, gasoline -1.1 million, and distillates -0.3 million. Refinery runs are expected to be -0.4% to 91.4%. As of last week’s update, EIA US crude oil stocks were 421.0 million barrels versus 443.7 million a year ago and a five-year average of 447.4 million.

 

ocean oil rigs

 

NATURAL GAS

March Natural Gas is higher this morning, following yesterday’s reversal lower after it failed to push above the 200-day moving average. The market has managed a sharp rally since last week’s weekly EIA storage report showed a significant draw for the second straight week. For the storage report today, the Reuters poll has a range of expectations calling for a draw of 94 to 111 bcf, with an average of expectation of -98. The five-year average change for this week is -109 bcf. The seasonal draws over the past two weeks have allowed the surplus to fall to 1.3% above a year ago compared to a 23% surplus last March. The 6-10-day forest has below normal temperatures extending in a northwesterly direction from Florida up to Chicago, covering most of the eastern half of the lower 48 save for some warmer than normal temps in northern New England, with near normal temperatures extending out to the Plains and northern Montana. Warmer than normal temps are expected from the Rockies to the west coast. The arrival of seasonably cold weather suggests we could continue to see significant draws from natural gas supply over then next couple of weeks.

 

 

 

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