Market Pressured by IEA Raising Its Forecast

CRUDE OIL

October Crude Oil is near unchanged this morning after falling to its lowest level since June 9 overnight. The market was pressured by International Energy Agency raising its forecast for oil supply growth this year more than demand in their monthly update. The IEA expects world oil supply to be +2.5 million barrels per day (bpd) in 2025, versus +2.1 million in their previous forecast. World oil demand is expected to be +680,000 bpd this year, versus +700,000 bpd previously. The API report yesterday was slightly bearish against trade expectations for crude oil and slightly bullish for the products but nothing was wildly outside the expected range. Sources told Reuters that API crude oil stocks were +1.52 million barrels for the week ending August 8 versus an average trade expectation from the Reuters poll of -0.3 million (range -4.3 to +2.0 million). Gasoline stocks were -1.78 million versus -0.7 million expected (range -2.1 to +2.0), and distillates were +0.295 million versus +0.7 million expected (range -1.8 to +3.8 million). The EIA report will be released this morning.

NATURAL GAS

Natural gas extended yesterday’s selloff overnight, with nearby prices falling to their lowest level since November. It is getting late in the season to expect a boost in cooling demand. Tropical storm Erin could become the first hurricane to reach the US this season. Hurricanes are not a big threat to production, but they could hurt demand if they cause power outages and/or impact LNG loadings.  For the weekly EIA storage report tomorrow, the early Reuters poll has a range of expectations for natural gas storage to show an increase of 31 to 57 bcf for the week ending August 8. The five-year average change for the week is +31 bcf. Last week’s report showed storage was +7 bcf for the week ending August 1 and was only the second time since April 11 that the weekly increase was below average.

PRODUCTS

Reuters reported heard that API that gasoline stocks were -1.78 million barrels last week versus -0.7 million expected (range -2.1 to +2.0) and that distillates were +0.295 million versus +0.7 million expected (range -1.8 to +3.8 million).  The monthly EIA report said US distillate inventories would end 2025 at the lowest year-end level since 2000, due to increased exports and demand.

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