CRUDE OIL
December Crude Oil was a little higher overnight following some mild pressure yesterday in the wake of the weekly EIA inventory report. The US has confirmed that North Korea has sent 3,000 troops to Russia for possible deployment to Ukraine, and this has added a bit to global anxiety. The Mideast war continues with no signs of abating. Israeli strikes pounded Beirut’s southern suburbs yesterday, and Hezbollah said it fire precision-guided missiles for the first time at Israeli targets. Worries over how Israel will retaliate to Iran’s missile strike last month and North Korea getting involved in the Ukraine conflict add to the geopolitical stew. No real impact on global oil movement has been seen since Hamas attacked Israel a year ago, but escalation worries are keeping a bid under the market. The EIA report yesterday came in bearish, with US crude oil stocks increasing 5.5 million barrels last week versus expectations for only a 100,000-barrel gain. This was more bearish than the API report, which showed a 1.6-million-barrel increase. Gasoline and distillate stocks also came in at the bearish end of expectations. Refiners were more active, up 1.8% from the precious week to 89.5% versus an expected decline of 0.1%. Implied gasoline demand increased from last week but came up short of a year ago. Crude, gasoline, and distillate stocks remain near the low end of their five-year ranges.
PRODUCT MARKETS
Gasoline and distillate stocks came in at the bearish end of expectations yesterday, but gasoline stocks were near their lowest levels in almost two years and were well below the five year average. Distillate stocks were below average as well.
NATURAL GAS
December Natural Gas was higher overnight for the fourth straight session as it continued its climb off last week’s contract lows. LSEG is forecasting average US gas demand (including exports) to increase from 95.7 billion cubic feet per day this week to 99.3 next week. The 6-10 and 8-14 day weather forecasts still have above normal temperatures in the eastern half of the US, but colder than normal temperatures expected for the west of the Rockies and extending all the way to the coast have become more pronounced. LSEG also said the amount of gas flowing to the seven big LNG facilities has risen to an average of 13.0 bcfd so far in October, up from 12.7 bcfd in September. The record was 14.7 last December. Expectations for today’s EIA Gas Storage report call for an increase of 43-90 bcf for last week (average of +60), below the five-year average for this week of +71 bcf. In last week’s report storage was up 76 bcf. As of last week, total storage was running 2.2% ahead of a year ago and 4.5% ahead of the five-year average. This was the smallest surplus to year-ago levels since early January 2023.
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