CRUDE OIL
Crude oil is slightly lower this morning but on the whole is holding firm against a disappointing FOMC result yesterday that pointed to fewer rate cuts in 2025. Chinese state refining company Sinopec said today that the nation’s oil consumption is set to peak at no more than 800 million metric tons in 2027 (16 million barrels per day), as diesel and gasoline demand is expected to weaken further as the nation shifts to EVs and natural gas-powered trucks. China’s 2024 consumption is forecast at 750 million tons. Sinopec added diesel demand is expected to fall 5.5% to 174 million tons in 2025 and gasoline demand by 2.4% to 173 million. LNG-fueled trucks accounted for 22% of truck sales in 2024. Electric vehicles have displaced about 26 million tons or 15% of gasoline consumption. Aviation fuel use is expected to grow by 7% to 45.5 million tons. The possibility of fewer rate cuts in 2025 lowers global demand growth expectations. Even if OPEC+ continues to hold back production, traders worry that 2025 will see a surplus.
The EIA report yesterday was bearish against expectations for crude oil, neutral for RBOB, and supportive for ULSD.
NATURAL GAS
February Natural Gas has defied forecasts for above normal temps for the next two weeks has managed a rally back to the vicinity of last week’s highs. The Great Lakes region colder will see colder than normal conditions during the next several days. The European model showed increase chances of a January freeze with an increase of 1.1 heating degree days in yesterday’s forecast. China’s state oil refiner Sinopec (Asia’s largest) said the nation’s natural gas consumption is expected to increase 6.6% in 2025 to 458 billion cubic meters due to greater use in the trucking industry as well as power generation. Consumption is expected to reached 570 bcm by 2030 and plateau around 620 billion between 2035 and 2040. This is up from previous forecasts. Estimates for today’s EIA gas storage report call for a draw of 115 to 129 bcf. The five-year average change for this week has a draw of 98 bcf.
PRODUCT MARKETS
February RBOB is also in a choppy sideways pattern. EIA gasoline stocks increased last week as expected, but implied demand did come in above year ago and five-year average levels. ULSD is finding support from a better than expected draw in distillate stocks this week.
>Interested in more futures markets? Explore our Market Dashboards here.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.