Written Commentary
CRUDE OIL
Asian Refining margins Lowest Since 2020
October Crude Oil was slightly higher overnight but still near the bottom of this week’s range. The jobs report this morning showed jobs added in August were weaker than expected, but unemployment fell slightly. The stock market responded positively but crude oil was more subdued. The weekly EIA Petroleum Stocks report yesterday was mixed, with US crude oil supply falling much more than expected for the week ending August 30 but gasoline supply showing a surprising build and distillate stocks fell rather than increasing. The EIA report followed the general pattern of the API data, which showed a 7.431-million-barrel decline in crude stocks last week. Asian refining margins have fallen to their lowest seasonal levels since 2020 with gasoline and diesel supplies, and this keeps concerns about demand in the market’s eye. India’s fuel demand fell 2.6% from a year ago in August. OPEC+ has agreed to delay a planned output increase in October and November by two months. The planned increase had been 180,000 barrels per day. They will hold a full meeting of the group to decide policy on December 1. Venezuela’s crude oil exports hit their highest level in four years in August, according to shipping data, fueled by expanded shipments to China.
PRODUCT MARKETS
October RBOB was slightly higher overnight after falling to its lowest level since May 2023 yesterday off the unexpected increase in EIA gasoline stocks last week. Implied demand was below the previous week, which was not a surprise, but it was also well below year-ago levels.
NATURAL GAS
October Natural Gas is higher this morning and is pushing up against the 50-day moving average at 2.295, which could be an important resistance line. The market was supported yesterday by a lower than expected US Weekly EIA Natural Gas storage number. This is a time of year stocks tend to build at an increasing rate, and the fact that the build was smaller than last week was particularly bullish. The report showed EIA gas storage for the week ending August 30 at 3,347 bcf, +13 bcf from 3,334 the previous week versus trade expectations calling for increases of 20 to 33 bcf. This was the smallest increase for this week in at least five years. The five-year average for this week is +45, and the range is +20 to +84. Storage was up 6.3% from a year ago and 10.8% above the five-year average versus +7.0% and +12.0% the previous week. World Weather Service says the US will be generally warmer than normal through the next two weeks but with a large part of the central and eastern US near to below normal through Friday through Monday.
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