Written Commentary
CRUDE OIL
November Crude Oil was steady to lower overnight, but it held inside yesterday’s range. According to Reuters, API crude oil stocks increased by 1.96 million barrels last week versus an average trade expectation calling for a 500,000 barrel decline. EIA numbers will be released this morning, and they have often been at odds with the API data. Refinery runs are expected to decrease by 1.1% to 91.7%. The trade is looking to this afternoon’s FOMC meeting results, and current expectations seem to be leaning towards a 50 basis-point cut, which makes it less likely for a bullish surprise. Middle East tensions were up overnight after Hezbollah accused Israel of planting explosives in pagers used by the group, which reportedly led to the deaths of a 12 people and 4000 injured. Reuters reports that the Biden administration will seek up to 6 million barrels of oil for the strategic petroleum reserve, which would be the largest yet in the rebuild of supply since the historic sale in 2022. They are looking for delivery in the first few months of 2025. Russia may hold off export cuts for western ports until October, despite a scheduled increase in availably primary oil refining capacity at local plants. China exported 770,000 metric tons of gasoline in August, down 44% from a year ago and the lowest since April, according to official data. Diesel exports totaled 880,000 tons, down from 1.26 million a year ago but up from 540,000 in July. Jet fuel exports reached 1.56 million tons versus 1.55 million a year ago but down from 1.76 million in July. Japan’s crude oil imports in August were down 15.2% from a year ago at 2.33 million barrels per day.
PRODUCT MARKETS
API gasoline stocks reportedly increased by 2.34 million barrels last week versus expectations for a 200,000-barrel increase. API distillate stocks increased by 2.30 million versus +600,000 expected. The EIA report will be released this morning. Like crude oil, RBOB and ULSD are holding inside yesterday’s ranges as they await the EIA numbers this morning and the FOMC result this afternoon.
NATURAL GAS
November Natural Gas is back below the 50-day moving average this morning, and that could be key bull-bear line today. Japan’s LNG imports in August were up 1.0% from a year ago at 5.729 million tons. The trade may take some cues from the FOMC meeting this afternoon, but attention may quickly switch to tomorrow’s weekly EIA storage report. The Reuters survey shows expectations for a 50-67 bcf increase last week versus a five-year average increase for this week of 67 bcf. Weekly injections have been trending below average in recent weeks, sometime at the lowest level in five years, as US production has slowed in reaction to the low prices.
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