Energies are trading higher this morning, a continuation from yesterday as traders are hopeful China’s larger-than-expected interest rate cuts will lead to additional fuel demand. China cut benchmark lending rates as part of stimulus measures to revive the economy as data last week showed it grew at the slowest pace since early 2023. According to Bloomberg, China’s crude demand fell by 7% in September year-over-year to 14.176 million bpd, and total Chinese oil demand this year is down 4% to 13.99 million bpd. Even with the current stimulus measures, the IEA expects China’s oil demand growth to remain weak into 2025 as the world’s largest oil importer electrifies its fleet and grows at a slower pace. The IEA said the oil market faces a sizeable surplus next year amid ample crude oil supply, spare oil production capacity, and slowing demand growth. Energy prices remain supported by tensions in the Middle East and the likelihood that Israel will retaliate against Iran. JP Morgan Chase said that given the low level of global oil inventories, the odds favor a sustained geopolitical premium in crude prices until the conflict between Israel and Iran is resolved. Demand fundamentals could keep energy prices capped through next year unless we see an uptick in demand or a major supply disruption.
Crude
- Today is the last trading day for November WTI crude oil futures.
- A poll conducted by Reuters estimates crude stocks increased by 0.118 million barrels for the week ended October 18.
- Vortexa reported that crude oil stored on tankers that have been stationary for at least seven days fell by 5.4% week-over-week to 58.8 million barrels.
- Libya’s crude production rose to 1.3 million bpd, the most in two months.
- Russian crude exports fell by 60,000 bpd to 3.31 million bpd the week to October 13. (BBG)
- Russia’s September crude production was 8.97 million bpd, down 13,000 bpd from Aug and below their monthly OPEC+ output target.
- Chinese refineries in September processed 14.29 million bpd of crude, up 38k bpd from August levels but 5.4% below levels from last September. (Reuters)
- Chinese crude volume available for the first nine months of the year was 15.25 million bpd, leaving the country with a surplus of 1.1 million bpd. (Reuters)
- China’s commerce ministry announced the crude oil import quite for non-state-owned firms would be set at 257 million metric tons (5.14 million bpd) for 2025, which is higher than the 243 million metric tons quota set for this year.
- China’s import quota increase is due to the start of China’s newest 200K bpd refinery units in late September.
- As of 8:45 am CST: Brent crude oil up $0.50 to $74.79, the US dollar index down $0.044 to 103.790 while the nearby e-mini S&P 500 futures contract is down 29.00 at 5867.25.
Diesel
- A poll conducted by Reuters estimates distillate inventory fell by 1.878 million barrels for the week ended October 18.
- U.S. diesel stocks are 8.5% below the five-year seasonal average.
- Midwest diesel stocks are 3% below the five-year seasonal average.
Gasoline
- A poll conducted by Reuters estimates gasoline stocks fell by 1.640 million barrels for the week ended October 18.
- U.S. gasoline stocks are 3% below the five-year seasonal average.
- Midwest gasoline stocks are less than 1% below the five-year seasonal average.
Propane
- Conway is trading at .7050 while Belvieu is trading at .7500.
- Conway Swap Q4-Q1 25/26 strip indicative midpoint ~.7275.
- Conway propane is trading at 42% to WTI.
Natural Gas
- Continuous natural gas futures prices are 37% or $1.37 below the five-year seasonal average and at the bottom of the historical range.
- Natural gas inventory in underground storage is roughly 4% above the five-year seasonal average.
- The remainder of October and the first few days of November are forecast to be much warmer than the 10-year average.
Continuous natural gas futures chart with five-year seasonal average and range showing spot prices are historically low for this time of year.