CRUDE OIL
October Crude Oil was lower overnight, as the recent optimism on the US economy was replaced by renewed concerns about Chinese demand, this time on a sharp decline in Chinese hope prices for July. Earlier this week it was reported that China’s refiners processed the equivalent of 13.91 million barrels per day in July, which was the lowest since October 2022. Chinese gasoline demand rose 3.3% from June, but that was slower increase than last year. Some of the slowdown was attributed to the growing popularity of electric vehicles. Half of all vehicles sold in China last month were either EVs or hybrids. US crude oil stocks increased 1.4 million barrels last week, the first increase in six weeks. US retail sales data yesterday beat expectations, which adds to the optimism about US consumption. But IEA and OPEC have both lowered their consumption expectations due to disappointing Chinese demand. The trade is still on the lookout for a retaliatory move by Iran. Despite the anxiety this triggers, there has been no significant interruption to global oil supply since the Iran-Hamas war began.
PRODUCT MARKETS
The products were lower overnight in line with crude oil.
NATURAL GAS
October Natural Gas was lower overnight after the market failed to follow through on its bullish response to the EIA Gas storage report yesterday. The report showed US gas storage for the week ending August 9 at 3,264 bcf, down 6 bcf from 3,270 the previous week. This was below trade expectations of -3 to +26. Storage was up 6.5% from a year ago and 13.1% above the five-year average versus +7.9% and +15.0% the previous week. Weekly builds have been below the average pace since for 17 out of the past 20 weeks, and this is the first time in a least five years that there was any draw during the summer months. The build pace does tend to slow down in the summer as cooling demand kicks in, but it starts to pick up again during the shoulder season. World Weather Service says the US will is expected to see a warmer than normal temperature bias and higher than usual cooling fuel demand through the next two weeks, while NWS still has cool weather dominating the northeastern quadrant and the west coast in the 6-10 day outlook. European gas storage was last seen at 88.47% full, which is close to the 90% target.
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