Crude Continues to Claw Back From Selloff

CRUDE OIL

December Crude Oil is higher this morning as it continues to claw back from it sharp selloff on Monday. The weekly EIA report yesterday was bullish toward expectations for crude oil and RBOB and bearish for ULSD. Crude oil stocks fell 500,000 barrels versus expectations for a 2.2-million-barrel increase, and gasoline stocks fell 2.7 million barrels versus an expected increase of 500,000. Distillate stocks fell 1.0 million versus -1.4 million expected. Traders seemed most encouraged by the decline in gasoline stocks, which are the lowest in almost two years. Sources told Reuters that OPEC+ may delay the lifting of its quotas, which had been planned for December. They had already postponed the action earlier this fall due to low prices, and the selloff this week has fueled speculation that they will do so again.

 

Crude Oil pump

 

PRODUCT MARKETS

US gasoline stocks are the lowest since September 2022, and the second lowest for this point in the year in at least six years. A Russian minister stated the government has no plan to lift its restrictions on gasoline exports for now. In August the government extended its ban to the end of the year but left open the possibility of lifting the ban early. 

 

NATURAL GAS

December Natural Gas is near unchanged this morning but trading in a relatively wide range as it flirts with testing the contract lows from earlier this month. Warmer than normal weather across much of the lower 48 has reduced heating demand at a time when it should be building, and more of that is expected for the next couple of weeks. For the EIA storage report today, Reuters has expectations for increase of 75 to 92 bcf. The five year average increase for this week is +78 bcf. Last week showed an injection of  80 bcf and was the first time it was above average since July 5. As of last week, US supply was 2.3% above a year ago and 4.6% above the five year average. This was the first week since mid-August that the surpluses widened. US LNG exports are expected to rise 2% in 2024, which would be the slowest annual increase since 2016, when the first big US LNG export facility opened, according to data from the US EIA. The slower gains are attributable to the lack of any new export plants, the last being opened in 2022. A hurricane that hit the Texas Gulf Coast earlier this year also outages at the nation’s second-largest export facility. Two projects are expected to open by the end of the year that will expand export capacity in 2025. Shell reported third quarter profits of $6 billion that exceeded forecasts by 12% as higher LNG sales offset a sharp drop in refining and trading results. Cheniere Energy reported a decline in its third-quarter profit, hurt by lower LNG margins, due to lower prices and higher global supplies and slower demand.

 

 

 

 

 

 

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