Written Commentary
CRUDE OIL
December Crude Oil is higher this morning but inside yesterday’s range. The US said yesterday that it was seeking 3 million barrels of oil for the SPR for delivery through May next year. Oil prices were sharply lower yesterday because Israel’s retaliatory strike against Iran did not include oil infrastructure and because Iran’s verbal response was restrained, which suggested that neither side was inclined to escalate the conflict. Still, tensions in the Mideast remain high. The BP CEO said global demand growth is a little bit below average in 2024 and 2025 because of reduced consumption in China. He said they expect demand to return to normal growth rates after Chinese President Xi introduces new stimulus measures. Refining margins are dismal right now; BP reported a 30% annual drop in profit in the third quarter. For the US inventory reports this week, a Reuters survey has an average expectation of a 2.3 million barrel increase in crude oil stocks, with gasoline expected to be up 600,000 barrels and distillates down 1.6 million. Refinery operations are expected to be down 0.1% to 89.4%.
NATURAL GAS
December Natural Gas is near unchanged this morning but in the bottom end of yesterday’s big range down. The has been no real change in the weather forecast, as it is still showing much above normal temps in the eastern half of the lower 48 and below normal west of the Rockies in the 6-10-day outlook and moderating conditions in the 8-14-day. The weather is still trending above normal overall, which should keep heating demand down. Foe the EIA storage report this week, a Reuters survey of analysts has expectations for increase of 75 to 92 bcf. Storage levels have started to grow a bit faster than normal due to the mild conditions. This has allowed the surplus supply to level off after shrinking since mid-summer.
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