CRUDE OIL
December Crude Oil is lower this morning but inside yesterday’s range as some of the excitement from the US election has quieted down. The dollar has given back some of yesterday’s gains as well. China’s crude oil imports fell to roughly 10.76 million barrels per day in October, down from 11.07 million bpd in September and 11.53 million a year ago. This was the sixth straight month they have declined. Year to date imports are running about 3.4% lower than a year ago. Their natural gas imports were 20% above a year ago in October. Concerns that Chinese oil demand would be damaged further by aggressive tariffs in the upcoming Trump administration was a negative force yesterday. The Trump Administration is expected to impose a “massive pressure policy” of sanctions against Iranian oil exports. This could cut supply by as much as 1 million barrels per day. The weekly EIA petroleum stocks report came in at the bearish end of expectations for Crude, RBOB and ULSD. Crude stocks increased more than expected but not as sharply as the API report had indicated. Gasoline and distillate stocks were more bearish, especially distillates. Both increased rather than decrease as expected. Refinery activity was stronger. Crude are seeing a seasonal build, but gasoline stocks are still low for this time of year. US oil producers are shutting-in US Gulf output and pulling workers off platforms ahead of Hurricane Rafael, but the storm does not appear to pose much of a threat.
PRODUCT MARKETS
Product prices are lower this morning, especially ULSD, which may be finding additional pressure from the EIA report yesterday. Gasoline stocks increased by 400,000 barrels last week versus an expected decline of 900,000, but distillate stocks were up 2.9 million versus an expected decline of 1.1 million.
NATURAL GAS
January Natural Gas is lower this morning but inside yesterday’s range. The market has bounced off Monday’s contract lows but may have a difficult time building support until US weather becomes more seasonal. The forecasts currently call for much above normal temperatures in the eastern two-thirds of the lower 48 with cooler than normal west. The eastern half of the lower 48 has seen consistently above normal temperatures over the past two months, and this has lowered US gas consumption. China imported 10.54 million metric tons of natural gas in October, up 20% from the same period last year. Year to date imports have reached 110 million tons, up 13.6% from a year ago. For the EIA storage report today, a Reuters survey has analysts looking for a build of 38-76 bcf last week. The average change for this week is +27.
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