Written Commentary
Ag Market View for October 29.24
October 29, 2024
CRUDE OIL
September Crude Oil is higher this morning but off the overnight highs. The PPI number today came in higher than expected, which counters the support the market drew yesterday from a cooler than expected CPI number yesterday, which gave a boost to demand expectations on ideas it would encourage the Fed to cut rates in the September meeting. A report overnight report that China’s crude oil imports in June were down 11% from a year ago and that year to date imports are down 2.3% from last year reinforces expectations of sluggish demand from that nation. The market is having to balance conflicting demand expectations from IEA, OPEC and EIA this week. IEA left its forecast for 2024 global demand unchanged and 970,000 barrels per day for 2024 and lowered its forecast for 2025 growth by 50,000 bpd to 980,000. OPEC left its forecasts unchanged from last month, with world oil demand expected to increase by 2.25 mbpd in 2024 and by 1.85 mbpd in 2025. EIA changed its forecast for 2025 from surplus to deficit, based on expectations for lower OPEC+ output and slightly higher consumption. US Crude Oil stocks at 445.1 million barrels are down 2.8% from a year ago and 4.4% below the five-year average.
PRODUCT MARKETS
September RBOB Gasoline closed higher yesterday and extended its rally overnight after US gasoline stocks fell more than expected this week, but the relatively hot PPI number and low Chinese crude import may limit upside potential. The market found support this week at the 0.382 retracement of the June-July rally, and that level, 2.4576, could be key support. Additional support comes in at 2.4195. Look for resistance at 2.5126 and 2.5230. September ULSD withstood a surprise increase in stocks last week yesterday and was higher overnight.
NATURAL GAS
September Natural Gas made a new low for the move overnight, as storage trends, weather, and the slow restart of the Freeport LNG plant continue to plague the market. Reuters reported that the Freeport plant is still mostly down this morning after shutting down on Sunday in advance of Hurricane Beryl. They said this could be attributed to problems around Freeport and not with the plant itself. Freeport is awaiting approval to reopen the port. The EIA Gas Storage report yesterday showed storage was up 65 bcf from last week versus expectations calling for increases of 49 to 56 bcf. Storage is up 9.7% from a year ago and 18.7% above the five-year average. Weather forecasts have turned milder, with the 6-10 and 8-14-day forecasts showing extreme heat being confined to Florida and the northern Rockies and below normal temp int the Midwest and around the Great lakes.
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