Week in Review – EIA Reports Inventory Shifts, But Markets Eye Weak Seasonal Demand

Week in Review - EIA Reports Inventory Shifts, But Markets Eye Weak Seasonal Demand

By Sydney CaseyPublished On: November 15, 2024Categories: Crude, Daily Market News & Insights, Diesel, Gasoline, Week in Review

This week, the Energy Information Administration (EIA) reported a 2.1 million barrel crude build, surpassing the expected increase of 0.8 million barrels. Despite this, crude inventories remain 4% below the five-year average, reflecting continued tightness in the market. Gasoline inventories saw a sharp decline of 4.4 million barrels, falling to 206.9 million barrels-the lowest level since November 2022. This drop was driven by a 6% increase in demand, which jumped to 9.4 Mbpd. Regionally, gasoline inventories hit hard lows, with the East Coast reaching its lowest levels since April 2023 and the Midwest its lowest since November 2023. Meanwhile, diesel inventories fell by 1.4 million barrels, defying expectations of a slight build, leaving stocks 5% below the five-year average.

Despite these bullish supply figures, petroleum futures experienced limited price gains, as traders focused on weak seasonal demand projections. Historically, gasoline demand softens from mid-November through the end of the year, with only Christmas week typically exceeding 9 Mbpd. Refinery runs remain high, with input rates over 1 Mbpd higher than the same period last year. However, weak refining margins for gasoline, diesel, and jet fuel are prompting refiners to consider scaling back operations, adding complexity to the near-term market outlook.

Looking further ahead, the International Energy Agency (IEA) has projected a global oil surplus in 2025, with supply expected to outpace demand by more than 1 Mbpd. This surplus, equivalent to over 1% of global output, persists even if current OPEC+ production cuts remain in place. Rising production from non-OPEC+ countries, including the U.S., Canada, Guyana, and Argentina, is expected to add 1.5 Mbpd, exceeding the IEA's forecasted demand growth of 990,000 bpd.

Weaker demand growth, particularly from China, is a key contributor to the surplus outlook. Slowing economic activity and the accelerating shift toward electric vehicles have dampened China's oil consumption growth, which is projected at just 140,000 bpd in 2024, a fraction of the 1.4 Mbpd growth seen in 2023. Additionally, rapid adoption of clean energy technologies is reducing oil consumption in transportation and power generation.

The IEA slightly revised its 2024 demand growth forecast upward by 60,000 bpd to 920,000 bpd, driven by higher gasoil demand. However, the sub-1 Mbpd growth outlook for both 2024 and 2025 underscores the impact of lackluster global economic conditions and the end of post-pandemic recovery trends. In contrast, OPEC remains more optimistic, forecasting 1.54 Mbpd demand growth for 2024.

Prices in Review

Crude opened on Monday at its highest for the week at $70.25. Crude trailed off for the remainder of the week opening at its lowest on Wednesday at $67.98. This morning, crude opened at $68.62, a decrease of $1.63 or -2.32%.

Diesel opened the week at $2.2405, and saw marginal up and down swings throughout the week. This morning, diesel opened at $2.2104, and overall decrease of 3 cents or -1.34%.

Gasoline opened on Monday at $2.0127, and saw marginal drops throughout the week. This morning, gasoline opened at $1.9778, a decrease of 3 cents or -1.73%.

This article is part of Daily Market News & Insights

Tagged: Daily Market News & Insights, demand, diesel, gasoline, inventory, prices, US, wti crude