RBOB and ULSD See Mild Gains Early

CRUDE OIL 

Crude oil climbed up to a 3-month high, but it could not hold onto early strength as it dropped sharply at midsession to finish Wednesday with a sizable loss and a daily reversal. While it saw downside follow-through, crude oil has rallied back into positive territory early in today’s action. Saudi Aramco is expected to ship 43.5 million barrels of crude oil to China, which compares to 46 million this month, and that news weighed on crude oil early in the day. The latest Chinese CPI and PPI readings remained low but were in line with trade forecasts, and that avoided an increase of Chinese near-term demand concerns. December production declines from OPEC and Russia and a larger-than-expected weekly crude oil draw in the API survey provided energy markets with support. The EIA report showed US crude oil stocks with a weekly decline larger than initial trade forecasts but much smaller than the weekly draw shown in the API survey. Cushing, Oklahoma crude oil stocks fell by 2.502 million barrels, putting them at just 20.038 million, their lowest level since October 2014 and barely above their operational low of 20 million barrels. Crude oil imports from Canada came in at 4.422 million barrels per day (bpd), the largest weekly reading since at least June 2010, when EIA weekly records for crude oil import origination began.

 

NATURAL GAS

Natural gas prices retraced Tuesday’s losses and closed Wednesday with a sizable gain, but they have extended their wide-sweeping coiling pattern by turning lower and posting moderate early losses this morning. Cold weather in the central and eastern US will be followed by frosty conditions in Texas and the southeast US later this week. Colder-than-normal temperatures will ramp up heating and power plant demand for natural gas over the next two weeks, significantly increasing upcoming weekly gas storage draws. The EIA released their weekly US gas storage report a day early due to President Carter’s funeral today, which showed a weekly decline of 40 bcf, smaller than trade forecasts calling for a draw of 51 to 55 bcf and compared to last week’s draw of 116 bcf, the previous year’s decline of 104 bcf and a 5-year average draw of 93 bcf. US gas storage is at 3,373 bcf, 6.5% above the 5-year average.

 

Flame from a blowtorch

 

PRODUCT MARKETS

The product markets could not hold their early strength on Wednesday as a second week of sizable stocks increases in gasoline and distillates weighed heavily on RBOB and ULSD, but they have found their footing with mild gains early in today’s trading. The US refinery operating rate was 93.3%, which matches the highest reading since July. It is up 0.6% from last week and compares to 92.9% last year, with a five-year average of 87.8%. Average total product demand for the past four weeks was up 0.15% compared to the previous year. EIA gasoline stocks rose 6.330 million barrels, reaching their highest level since March. However, gasoline stocks are 7.268 million barrels below last year and 3.325 million below the five-year average. Implied gasoline demand had a mild uptick, but 8.418 million bpd is well below the 9 million bpd level. Average total gasoline demand for the past four weeks was up 1.1% compared to last year. Gasoline imports came in at 455,000 bpd compared to 665,000 bpd the previous week. EIA distillate stocks rose 6.071 million barrels, reaching their highest level since January 2024.

 

 

 

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