WTI crude oil futures fell to around $76.6 per barrel on Monday, extending losses from a nearly 2% drop in the previous session, driven by persistent demand concerns from top oil consumer China. Recent economic data from China revealed a slowdown in growth, declining home prices, and an increase in unemployment, leading Chinese refineries to reduce their crude processing rates. This follows last week's downward revision by OPEC and the IEA of their 2024 global oil demand growth forecasts, citing weaker data and declining Chinese demand. Meanwhile, markets continued to monitor potential oil supply risks from elevated geopolitical tensions. Reports indicate that US Secretary of State Antony Blinken is in the Middle East, seeking to secure a ceasefire agreement for Gaza amidst Israel's ongoing strikes, while Russia retaliated against Ukraine’s unexpected incursion.
US natural gas futures fell by over 2% to below $2.15/MMBtu on Friday due to forecasts for cooler weather and high gas storage levels, despite a surprising draw in inventories. The US Energy Information Administration reported a draw of 6 billion cubic feet (bcf) from inventories for the week ending August 9, lowering stocks to 3.264 trillion cubic feet (tcf). Despite this draw, storage remains 7.2% higher than last year and 12.5% above the five-year average. High production and reduced demand from LNG maintenance have kept storage levels high. The market remains weak, reflecting concerns about excess supply despite the EIA's unusual early August draw.
Gasoline futures in the US fell to $2.35 per gallon, approaching the over-six-month low of $2.3 touched on August 6th, tracking the lower prices in oil benchmarks as markets continued to assess the demand outlook for crude oil feedstock. The International Energy Agency noted that the oil market is due to record a supply surplus in the fourth quarter should OPEC+ go forward with its plans of phasing out production cuts. This magnified the cartel’s downward revision to this year’s demand, primarily due to China’s slowing economy and the consequent drop in energy consumption. To add, the latest data from the EIA showed that crude oil stocks in the US unexpectedly rose on the week ending August 9th. This offset the sharper-than-expected decline in gasoline inventories, which totalled a near 3 million barrel net draw in the period.
Heating oil futures in the US dropped below $2.38 per gallon, nearing the two-month low of $2.29 reached on August 6th, as easing concerns over crude oil supply for refineries outweighed a sharper-than-expected decrease in US distillate fuel inventories. The latest EIA report showed a 1.357 million barrel build in crude oil inventories for the week ending August 9th, countering API's findings and alleviating supply fears amid rising geopolitical tensions in the Middle East and the Gulf of Mexico’s hurricane season. Meanwhile, heating oil stockpiles fell by 0.268 million barrels, and distillate stocks decreased by 1.673 million barrels, nearly double the expected draw, limiting the heating commodity’s decline.
