Oil prices are trading back and forth on mixed signals from our good friends at the OPEC cartel and their felling of pessimism that is out of line with the optimism of the Trump Train economy.
Maybe they are pessimistic because of drill baby drill or perhaps it is because that despite global supplies being well below normal for this time of year, they have a hard time holding a bid.
Which could mean some more action at the December 1st OPEC meeting where they should extend cuts or make additional cuts.
While cheating members compliance with production cuts are improving showing OPEC commitment to support prices, OPEC predictions for demand have fallen again for the fourth month in a row.
That has led to a shake and bake kind of trade in oil and products today after Tuesday's algo driven market selloff.
Libya’s return to the oil market after its recent political turmoil did offset the better compliance from the cheaters.
On the compliance side Platts OPEC+ survey by S&P Global Commodity Insights, found that OPEC’s alliance’s oil production rose 30,000 b/d to 40.26 million b/d in October, with a surge in Libya largely canceled out by drops in Kazakhstan, Iraq and Iran.
That put OPEC output up 330,000 b/d, allies cut 300,000 b/d / OPEC
OPEC+ alliance over target by 169,000 b/d in October.
China continues to be the reason why OPEC is pessimistic on demand. They lowered demand by 107,000 barrels because of weaker demand from China and India, as well Africa.
OPEC said that “The global oil demand growth forecast for 2024 is revised down slightly by 107,000 tb/d from the previous month’s assessment to 1.8 mb/d, y-o-y.
This minor adjustment is mainly due to updated data for 1Q24, 2Q24 and 3Q24.
OECD oil demand is expected to grow by around 0.2 mb/d, while non-OECD demand is forecast to expand by close to 1.7 mb/d.
In 2025, global oil demand growth is also revised down slightly by 103 tb/d from the previous month’s assessment to 1.5 mb/d, y-o-y. The OECD demand is expected to grow by 0.1 mb/d, y-o-y, while demand in the non-OECD is forecast to expand by 1.4 mb.
Still crack spreads in both gas and oil suggest that there should not be too much downside in oil from this point.
OPEC is showing some concern about losing its market share.
They pointed out that preliminary data shows US crude imports fell to an almost two-year low of 6.0 mb/d in October, while exports returned above 4 mb/d for the first time in three months, supported by higher flows to Europe.
US product imports fell further to 1.5 mb/d, led by lower inflows of gasoline, while product exports remained strong compared to the previous year at 6.4 mb/d, supported by a high distillate fuel exports. Preliminary estimates point to OECD Europe crude and product inflows increasing m-o-m in October, supported by US exports into the region.
In September, Japan’s crude imports strengthened further to reach 2.4 mb/d, but remained 7% lower, y-o-y.’
Japan’s product imports edged down on declines in kerosene and diesel, while product exports rose 10% on higher outflows of most major products, especially fuel oil. Crude imports into China fell back 4% in September to average 11.1 mb/d, while product inflows remain strong on continued healthy inflows of fuel oil and LPG. India’s crude imports averaged 4.5 mb/d in September, remaining at the upper end of the latest five-year range for the month and representing a seasonal decline. India’s product exports jumped 30%, m-o-m, supported by higher outflows of diesel.
We should see some semblance of a bottom in Petroleum on Tuesday. We should do our November Rally but be prepared for the traditional Thanksgiving week selloff.
Natural Gas Futures is on resistance. Production in the Gulf of Mexico is coming back online. Massive shorts are nervous and now if we get cold, we could see a dollar rally. If not its back to home on the trading range