CRUDE OIL
January Crude Oil lower this morning after another round of disappointing demand data from China. China’s refiners processed the equivalent of 14.02 million barrels per day in October, down from 14.3 million in September and 15.05 million in October 2023. This was the seventh straight month of year over year declines. Chinese October industrial output was up 5.3% from a year earlier versus +5.4% in September. This was below expectations calling for a 5.6% increase. However, Chinese retail sales were up 4.8% versus +3.2% in September. This was the strongest growth since February. IEA said yesterday that global oil supply will exceed demand in 2025 even if OPEC+ cuts remain in place. The EIA Report yesterday was mixed, with US crude oil stocks coming in at the bearish end of expectations and gasoline and distillate stocks bullish. Gasoline stocks were the lowest they have been for this time of year in at least six years and are near the lowest they have been for any time in six years.
PRODUCT MARKETS
January RBOB is near unchanged this morning, under pressure from crude oil but finding support from the bigger than expected decline in gasoline stocks. US gasoline supply is near its lowest level in six year. US implied demand last week at 9.383 million barrels per day versus 8.828 million the previous week and 8.949 million a year ago. January ULSD sold off overnight to test Wednesday’s two week low, but it has bounced off that level. Distillate stocks were also lower than expected last week, but they are well above year ago levels.
NATURAL GAS
January Natural Gas is lower this morning on follow through from yesterday’s selloff. EIA Gas storage for the week ending November 8 was 3,974 bcf, +42 bcf from 3,932 the previous week. This was within trade expectations of +26 to +53 and slightly above the median of +40. The five year average increase for the week is +28 bcf. Storage was up 3.7% from a year ago and 6.0% above the five-year average versus +4.2% and +5.6% the previous week. Thanks to the mild weather, the US supply surplus has started to increase after shrinking this summer. US temperatures in the lower 48 have turned more seasonal recently however, with below normal showing up across a wide section from California to the lower Midwest. This should help boost consumption and possibly tighten the surplus. Supply has a seasonal tendency to peak in November. China’s natural gas production in October totaled 20.8 billion cubic meters, up 8.4% from a year ago. Year to date output is up 6.7% to 203.9 bcm.
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