- Oil trades lower as the dollar continues to rally
- The US Dollar index has climbed over the past few days, adding bearish pressure to crude prices
- The EIA released their short-term energy outlook yesterday and decreased their forecast for OPEC spare capacity from 4.1 MMBbl/d in 2023 to 3.7 MMBbl/d and from 4.9 MMBbl/d to 4.3 MMBbl/d in 2024
- Chinese oil demand outlook worsening (BBG)
- Chinese crude and product inventories are building, refining margins are falling, and the anticipated jump in air travel demand has materialized as strongly as expected
- Chinese crude imports did increase by 7% in October, however, that was following a 13% decline in September
- Margins at independent Chinese refineries turned negative in late October for the first time since early January due to low fuel prices and high crude prices
- Shifts in Middle East oil supply are making lighter oil cheaper (BBG)
- The premium for Abu Dhabi’s Murban crude, which is one of the most sought-after Middle Eastern crudes, has fallen from $5/Bbl in January to only 50c
- The change has been attributed to Saudi Arabia’s prolonged supply cuts and expectations that Abu Dhabi’s Ruwais refinery will switch to a different crude slate
- The decrease in Murban premium has also reduced the attractiveness of similar grades produced in the US and Africa as part of a broader trend in which heavier crudes have become more expensive than lighter crudes