Sharp Increase in US Crude Oil Exports

CRUDE OIL

November Crude Oil is higher this morning but still short of Wednesday’s high. Yesterday EIA report was bullish but the market came up short of taking out Tuesday’s high. The FOMC cut rates as expected, and while this should be bullish for energy consumption, there may have been a bit of “sell the fact” built into the action. The EIA report showed US crude stocks falling 9.3 million barrels last week, much more than expected and considerably more than the 3.42-million-barrel decline in API stocks. The big drop was attributed to a surge in US exports, but some traders may be doubting whether the veracity of the data or whether the US can keep up that pace. Net crude oil imports collapsed last week due to a surge in exports to 5.277 million barrels per day, the highest since October 2023, when they reached 5.301 million. This was almost double the previous week.

NATURAL GAS

November Natural Gas is slightly lower this morning after failing to take out its high from earlier this month yesterday. For the EIA report today, the Reuters poll has an average expectation calling for US storage to be +80 billion cubic feet for the week ending September 12 (range +70 to +88). The 5-year average for the week is +69 bcf. If the report comes in as expected, storage would be down roughly 0.8% from a year ago and 5.6% above the five-year average versus -1.3% and +5.7% the previous week. Mild weather expected in the US through October 1 may lead to some late season cooling demand, but it also delays the start of the heating season. LSEG projected average gas demand in the Lower 48 states, including exports, to increase from 102.6 billion cubic feet per day this week to 103.4 bcfd next week.

PRODUCTS

Yesterdays’ EIA report was bullish for gasoline and bearish for diesel, with US gasoline stocks down 2.3 million barrels last week versus an expected increase of 100,000 and distillate stocks up 4 million barrels versus an expected increase of 1.0 million. Implied gasoline demand was strong, coming in at 8.810 million bpd vs 8.508 million the previous week and 8.776 million a year ago. Distillate demand was 3.621 million bpd, which was an improvement over the 3.377 million the previous week but down from 3.798 million a year ago. Above normal temperatures expected across most of the nation through October 1 will keep heating demand at a minimum.

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