Written Commentary
CRUDE OIL
December Crude oil is higher this morning and back near this upper end of the range from the latter half of last week. China cut its benchmark lending rates today as expected by 25 basis points to 3.10%, and this provided a note of optimism regarding demand. China’s GDP grew 4.6% in the third quarter, slightly better than the +4.5% expected but below the +4.7% in the second quarter. The head of the International Energy Agency said today that they expect China’s oil demand growth to remain weak in 2025 despite the recent stimulus measures, as the nation electrifies its car fleet and their economy grows at a slower pace. China has accounted for more than 60% of global oil demand in the last decade when their economy grew at 6.1% on average. In contrast, the CEO of Saudi Aramco told an energy conference in Singapore that he was still fairly bullish on China’s oil demand in light of their recent stimulus announcements and because of rising demand for jet fuel and others. The Baker Hughes rig count on Friday showed US oil rigs in operation were up 1 to 482 last week. This was down from 502 rigs a year ago and below the five-year average of 495. A US envoy will hold talks with Lebanese officials in Beirut on conditions for a ceasefire between Israel and Hezbollah. Israel continued its campaign against Hezbollah strongholds over the weekend. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 7,640 contracts of crude oil for the week ending October 15, reducing their net long to 129,653.
PRODUCT MARKETS
Friday’s Commitments of Traders Report showed managed money traders were net buyers of 10,453 contracts of RBOB for the week ending October 15, increasing their net long to 49,917. In ULSD, managed money traders were net sellers of 3,576 contracts last week , increasing their net short to 22,488.
NATURAL GAS
December Natural Gas had fallen into an oversold condition after extending its two-week selloff overnight into new contract lows, and then it reversed higher. Warmer than normal temperatures across the lower 48 states have lowered usage. LSEG says average gas output so far in October has been 101.4 billion cubic feet per day versus 101.8 in September. They also expect average gas demand to fall from 97.9 bcfd this week to 96.4 next week but to increase to 99.9 the following week. The NWS 6-10-day forecast has above normal temperatures across most of the lower 48, except the Pacific Northwest, which has near-normal temperatures expected. The 8-14 day has below normal west of the Rocky Mountains but above normal in the eastern two-thirds of the nation. The Baker Hughes rig count showed US natural gas rigs in operation were down 2 last week to 99. This was down from 118 rigs a year ago and below the five-year average of 117. Egypt plans to issue a tender for up to 20 cargoes of LNG to cover demand for the first quarter of 2025, sources told Reuters.
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