Crude Up On Outlook For China Economy

CRUDE OIL 

January Crude Oil is moderately higher this morning on a slight improvement in the outlook for China’s economy after the Chinese Politburo said that the nation will adopt an “appropriately loose” monetary policy next year. This would be the first easing of its stance since 2010 and would happen alongside a more proactive fiscal policy to spur economic growth. The problem is, China’s oil demand growth is limited by their embrace of EVs and natural gas powered trucks. The fall of the Assad regime in Syria adds to political uncertainty in the Mideast, and it also puts pressure on Russia and Iran, both of which have been benefactors of the regime. The uncertainty may be supportive to oil prices, but it may also put pressure on Iran and Russia to sell more crude. Saudi Arabia cut its January 2025 prices for Asian buyers to their lowest levels since early 2021 as with weak demand from China has weighed on the market. The Baker Hughes rig count showed US oil rigs in operation were up 5 rigs to 482 last week. This was down from 503 rigs a year ago and below the five-year average of 501.6. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 4,829 contracts of crude oil for the week ending December 3, increasing their net long to 116,434.

 

oil rig sunset

 

 

NATURAL GAS

Friday’s Commitments of Traders Report showed managed money traders were net sellers of 697 contracts of RBOB for the week ending December 3, reducing their net long to 66,491 which is not overbought. For ULSD, managed money traders were net sellers of 504 contracts, increasing their net short to 27,890.

 

PRODUCT MARKETS

January Natural Gas gapped higher overnight and traded to its highest level since November 29. The is a surprising move considering the mild weather trend and the lackluster reaction to a moderately bullish EIA storage report last week. The collapse of the Assad regime in Syria may be lending some support, but the size of the rally relative to crude oil suggests there is something else afoot. The weather does turn cold again this week in the upper Midwest and Great Lakes, but warm weather returns this weekend. The 6-10 and 8-14-day forecasts show above normal temperatures across the lower 48 except the southern part of Florida, which is expected to be near normal. The Baker Hughes rig count showed US natural gas rigs in operation were up 2 rigs to 102 last week. This was down from 119 rigs a year ago and below the five-year average of 117. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 11,000 contracts of natural gas for the week ending December 3, increasing their net short to 72,717.

 

 

 

 

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