Written Commentary
NATURAL GAS
December Natural Gas extended its recent selloff overnight and traded to a new low for the move and its lowest in 3+ years. Mild weather across most of the lower 48 is reducing heating demand. Yesterday’s EIA storage report showed US gas storage for the week ending October 11 at 3,705 bcf, +76 bcf from 3,629 the previous week. This was within trade expectations of +63 to +87 and slightly below the average expectation of +77. Storage was up 2.2% from a year ago and 4.5% above the five-year average versus +2.8% and +4.9% the previous week. Chinese natural gas production in September totaled 19.3 billion cubic meters, up 6.8% from a year ago. However, China imported 6.84 million tons of LNG, up 21.7% from last year. January-September imports totaled 57.09 million , up 11.9% from 2023.
CRUDE OIL
December Crude Oil is near unchanged this morning as the market weighs the latest detail on China’s stimulus plan against more disappointing data from their energy sector. China’s central bank introduced two swap and relending schemes today that could put as much as 800 billion yuan into the stock market, and the equity markets rallied in response. China’s refinery output in September was down 5.4% from year-ago levels, marking a sixth consecutive month with a decline. Refiners processed 58.73 million metric tons, according to data from the National Bureau of Statistics, the equivalent of 14.29 million barrels per day. This was up from 13.91 mbpd in August but down an estimated 7.7% from a year ago. Mideast tensions first eased a bit with the announcement that the leader of Hamas had been killed in an Israeli missile strike, appeared at first to open the door for negotiations about a hostage release. However, Hezbollah said it was moving to a “new and escalating phase” in its war against Israel in response, while the Israeli PM said they would press on. The EIA Petroleum Stocks report was mixed yesterday, with crude stocks falling rather than increasing and distillate stocks falling more than expected. However, oil output in North Dakota, the third-largest producing state in the U.S., fell by around 500,000 barrels through October, after wildfires crossed into key producing counties earlier this month, a state regulator said.
EIA report details:
- Crude oil stocks -2.2 million barrels last week versus +1.8 million expected.
- Crude stocks at Cushing, Oklahoma +0.1 million barrels last week versus +1.2 million the previous week.
- Gasoline stocks -2.2 million barrels vs -2.2 million expected.
- Distillate stocks -3.5 million barrels vs -1.5 million expected.
- Refineries +1.0% to 87.7% versus -0.6% to 86.1% expected.
- Crude oil imports 5.529 million barrels per day vs 6.239 million the previous week.
- Crude exports 4.123 million bpd vs 3.794 million the previous week.
- Net imports 1.406 million bpd vs 2.445 million the previous week.
- Implied gasoline demand 8.620 million bpd vs 9.654 million the previous week and 8.943 million a year ago.
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