China Demand Concerns Back in Spotlight

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.

 

Offshore oil platform

 

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.

 

 

 

Interested in more futures markets?  Explore our Market Dashboards here.

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2024 ADM Investor Services International Limited.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now