It’s Halloween. Everyone is entitled to one good scare. The Energy Information Administration (EIA) came out with a spooky bullish weekly supply and demand report that could lead to spine chilling supply squeeze and what is unnerving is that the market seems almost insensible to the potential for this as US Petroleum demands 21.638 million barrels a day the most in a year.
That was led by a surge in gasoline demand that drove those inventories down to a two-year low. Yet because the market is afraid of its own shadow and the upcoming election, it only responded modestly. Then what happens when you hear the door slam and realize there’s nowhere left to run?
Even unnamed sources from OPEC suggested that their production cuts might be delayed for one or two months or perhaps indefinitely, was not enough to exercise the demons of doubt that are trying to steal the soul of this market.
Oh sure, the market did rally on the rash of bullish news but was reluctant to fill the gap left on Sunday night. Perhaps it was because they feared the gruesome US national debt that hit a horrifying $35.81 trillion and the possibility of a disputed presidential election that might turn the US economy into a zombie.
Let us face it, there is something haunting in the light of the moon especially if you put the EIA data under it. A hair-raising surge in gasoline demand to 9.42 million barrels a day against a backdrop of oil inventories that fell at a time of year when they should be rising.
The EIA reported that commercial crude oil inventories fell by 500,000 barrels and are 4% below the five-year average for this time of year. Distillate fuel inventories decreased by 1.0 million barrels last week and are about a frightful 9% below the five-year average as we head into winter.
We saw a spooky sign from OPEC as imports of crude oil from Saudi Arabia fell to their lowest point last week since January 2021, at just 13,000 bpd, down from 150,000 bpd on the week. Crude imports from Canada, Iraq, Colombia, and Brazil all slipped during the week, according to Reuters.
Giovanni Staunovo reminds us that the EIA will provide US oil supply/demand data for the month of August. US July crude production was at 13.205mbpd, EIA’s August forecast is 13.359mbpd. US crude oil demand was at 20.768mbpd in August 23, EIA’s forecast for August 24 is 20.421mbpd.
With global inventories running close to decades low it might become scary if China stimulus kicks up Chinese oil demand. John Kemp at Kemp Energy pointed out that China’s manufacturers have reported a significant improvement in the trajectory of business activity.
The official purchasing managers index climbed to 50.1 (35th percentile for all months since 2011) in October up from 49.8 (26th percentile) in September and 49.1 (6th percentile) in August backdrop of regulatory hell. Without LNG exports, the industry will face contraction with the loss of jobs as our country loses international influence.
As the LNG door slammed – there’s nowhere left to run! You see coal expand and wonder if you’ll ever see the sun. You close your eyes and hope that this is just imagination, but all the while you see carbon. The index climbed above the 50 points will be locked threshold dividing expanding activity from a contraction for the first time since April.
US natural gas producers are having nightmares about a Kamala Harris presidency on fear that LNG Exports will be stuck in purgatory against a creepin’ up behind! You’re out of time! Until we get the natural gas report!
The Wall Street Journal says that:
“Natural-gas inventories likely increased by more than usual last week as mild autumn temperatures limited demand heading into the end of the injection season, according to a survey by The Wall Street Journal.
“Gas in underground storage is expected to have risen by 82 billion cubic feet to 3,867 Bcf in the week ended Oct. 25, according to the average estimate of 11 analysts, brokers and traders. Forecasts range from an injection of 75 Bcf to 94 Bcf.
“The inventory build would be larger than the five-year average for the week of 67 Bcf and put inventories 182 Bcf or 4.9% above the five-year average, increasing the surplus for a second straight week.”
It’s close to midnight and something’s buying oil in the dark. Under the moonlight, you see a pop that almost Stops Your Stop. You Try to Scream, but the computer takes the trade before you change It. You Start to scream, as oil rallies hard right before your eyes, You’re Paralyzed!
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