Crude Traded to Highest Level in a Week

CRUDE OIL 

January Crude Oil extended this week’s rally overnight and traded to its highest level in a week. Ideas that China stands ready to ease monetary policy as well as boost fiscal spending have provided some hope that 2025 oil demand will be better than previously expected. Reports this week that China’s crude oil imports in November were up 14% from a last year have provided some rare bullish support from that part of the world as well. Bloomberg News reported yesterday  that the US government was considering harsher sanctions against Russia’s oil trade. Ukraine struck a southern Russian port on the Azof Sea and triggered a fire at an oil depot. Kyiv says it hits Russian energy facilities in retaliation for attacks on Ukrainian energy infrastructure. The API report yesterday leaned bearish against expectations, with US crude oil stocks +499,000 barrels for the week ending December 6, gasoline stocks +2.85 million and distillates +2.45 million versus trade expectations calling for a decline of 900,000 barrels in crude and +1.7 million for gasoline and +1.4 million for distillates. The EIA will be out later today. In their Short Term Energy Outlook, EIA is forecasting global oil production in 2025 to increase by 1.6 million barrels per day (b/d) in 2025, with almost 90% of that growth coming from countries that are not part of OPEC+. US net crude imports are forecast to fall by 20% to 1.9 million barrels per day, their lowest since 1971, due to larger production and lower refinery demand. US production expected to reached 13.52 million barrels per day, up from 13.24 million in 2024.

NATURAL GAS

January Natural Gas is back near Monday’s high this morning following a one-day setback yesterday. A warmer than normal trend is expected to develop over the nation in the next week, but in the meantime several northern areas of the US will be dealing with seasonably cold weather. In their short term energy outlook, EIA is estimating US 2024 dry gas production at 103.2 billion cubic feet per day, down from 103.8 in 2023, citing reduced drilling after prices fell to a 32-year low in March. For the US storage report tomorrow, a Reuters survey of analysts calls for a draw of 59 to 176 billion cubic feet for the week ending December 6, with a median estimate of -118.  The average change for the week is -66. As of last week’s report, US storage was up 5.9% from a year ago and 7.7% above the five-year average. The 6-10 and 8-14-day forecast still show a warmer than normal trend over most of the lower 48, with near-normal along the eastern seaboard in the 8-14 day.

PRODUCT MARKETS

Like crude oil, January RBOB, approached trendline resistance (and the 100-day moving average) overnight.

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