OPEC also cut its demand forecast for the 4th-consecutive month, lowering this year’s consumption growth to +1.82 million b/d vs. their prior estimate of +1.93. Next year’s demand is now expected to increase by 1.54 million b/d vs. a previously-stated +1.64. Meanwhile, production from the US, Brazil, Canada, and Guyana is expected to increase by 1.5 million b/d in 2025, leading to the foreseen excess. Additionally, the US Energy Information Agency (EIA), in its latest Short-Term Energy Outlook report, lowered its forecasted price for Brent crude to $76.06 for next year from $77.59/bbl.
The EIA's Weekly Petroleum Status Report indicated that commercial crude oil inventories for last week increased while refined products declined considerably. Total US oil production dipped to 13.4 million b/d from 13.5 million b/d the prior week and vs. 13.2 million b/d last year at this time.
The US total rig count was 1 unit lower last week to 584 vs. 618 a year ago. The US Department of Energy has announced that it has ended the repurchasing of crude for the Strategic Petroleum Reserve. There are growing signs that the US shale boom may be nearing a peak as recent measures of “oil recovered per foot” indicate a drop of 15% since 2020. And, the US Department of Energy has completed its planned re-purchases of oil for the SPR. Last week’s 9.4 million b/d of gasoline demand was on par with several of last summer’s weekly demand figures while the refinery utilization of 91.4% was also unseasonably high.
October’s CPI was +0.2% to an annual rate of +2.6% vs. the +2.4% in September. Fed Chair Powell indicated this week that there is no rush to reduce interest rates further given inflation is still above 2%, the economy is strong and unemployment remains low. Meanwhile, industrial production for October was -0.3%, in-line with expectations; retail sales rose +0.4% and the number of unemployment claims last week was the lowest in 6 months. The dust has settled post-election and the uncertainty about the reality to come has equities lower this week. Meanwhile, the USD has risen quite a bit and holding at the new higher levels which is bearish for crude prices.
