OIL AND GAS DECLINE FURTHER
Brent crude futures fell almost 1% to a two-week low of $83.9 a barrel on Thursday, more than 3% below a three-year high of $86.7 hit earlier in the week amid a larger-than-expected buildup in North American crude stockpiles. EIA data showed US crude inventories increased by 4.3 million barrels last week, well above market expectations of a 1.9 million barrel expansion. Still, figures also showed crude supplies at the Cushing, Oklahoma delivery hub declined the most since January, with supply levels already at the lowest since 2018. Meanwhile, oil prices also came under pressure amid reports that Iran agreed to restart broader talks on reviving the 2015 nuclear accord with the EU, raising concerns about a return of Iranian oil to the markets.
US natural gas futures were down almost 5% to below $5.9 per million British thermal units on Thursday, offsetting a 3% gain in the previous session, as domestic stockpiles built up a notch faster than expected and tracking a general decline in global prices after Russian President Vladimir Putin ordered Gazprom to start refilling its European gas-storage facilities from November 8th. The EIA weekly report showed an 87bcf addition of gas into storage last week, slightly above market forecasts of an 86bcf increase. Also, output in the US Lower 48 states has averaged 92.3 billion cubic feet per day so far in October, up from 91.1 bcfd in September, according to Refinitiv. Meanwhile, the amount of gas flowing to US LNG export plants has averaged 10.5 bcfd so far in October, up from 10.4 bcfd in September. US gas demand, including exports, is expected to rise to 92.7 bcfd next week from 90.7 bcfd this week as more homes and businesses turn on their heaters.
Gasoline futures declined below $2.5 per gallon, tracking losses in the oil market but still remaining close to the highest level since September 2014, amid tight supplies and a strong rebound in global demand. Meanwhile, US government figures showed gasoline inventories fell 1.994 million barrels last week, the third consecutive period of declines and slightly above market expectations. On Tuesday however, API figures showed a surprise rise in stockpiles.
Heating oil futures fell back from a recent 7-year high to trade slightly below $2.5 a gallon at the end of October, after EIA data showed distillate stockpiles, which include diesel and heating oil, fell by 0.4 million barrels in the October 22nd week, compared to market expectations of a 2.3 million drop. Still, the overall picture is composed of pricey heating oil sustained by the prospect of strong demand due to forecasts of cooler-than-expected weather over the coming weeks and tight supplies. Also, the stocks are at their lowest level since the first week of March 2020.
