Written Commentary
CRUDE OIL
March Crude Oil is higher this morning following a sharp selloff of the previous two sessions. The market sold off yesterday on more disappointment with China’s stimulus efforts as well as low inflation readings that point to a sluggish economy and sluggish oil demand, but it may have gotten oversold after falling $4.76 in three sessions. This morning, OPEC cut its forecast for global oil demand growth in 2024 to 1.82 million barrels per day, down from 1.93 million forecast last month. They also cut 2025 growth to 1.54 million bpd from 1.64 million previously. They trimmed China’s growth forecast to 450,000 bpd from 580,000. Their estimates are still well ahead of IEA, which has a global growth forecast of 860,000 bpd in 2024. The US exported 130,000 barrels per day of crude oil to China in October, down from 134,000 in September but up from 24,000 in August. This is about half of what they were doing in 2023, when they averaged 259,000 bpd. China’s overall crude imports fell 9% in October. China’s oil imports are also limited by their move to alternatively powered vehicles. More than half of their auto sales last month were electric and plug-in hybrids, and sales of LNG powered heavy trucks are rising.
NATURAL GAS
January Natural Gas is lower this morning following yesterday’s rally to its highest level in two weeks. Reports that Freeport LNG has seen record gas in the wake of a plant overhaul have helped offset concerns that mild temperatures lowering demand at a time when they should be seeing a seasonal increase. A heavy snowstorm in Colorado may have also reminded traders that winter is coming. The 6-10-day forecast shows much below temperatures in the western part of the lower 48 with much above norma in the east, with a narrow band of near-normal in the western plains. Conditions moderate somewhat in the 8-14 day. Heating degree day forecasts are mixed, but lean lighter than normal.
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