Oct 9: International Oil Prices Decline

On October 9th, international crude oil futures prices fell, primarily due to a significant increase in U.S. inventories overshadowing concerns about the situation in the Middle East and hurricanes. Data from the U.S. Energy Information Administration (EIA) showed that U.S. crude oil inventories increased by 5.8 million barrels last week, reaching 422.7 million barrels, while analysts surveyed by Reuters had expected an increase of 2 million barrels. President Biden discussed Israel's plans against Iran in a phone call with Israeli Prime Minister Netanyahu on Wednesday; neither the White House nor Netanyahu's office disclosed details of the discussion. The U.S. is preparing for Hurricane Milton, which triggered tornadoes and heavy rain on Wednesday and is expected to make landfall in Florida within a few hours. The storm has led to an increase in gasoline demand in Florida, with about a quarter of gas stations running out of supply, helping to support crude oil prices. The WTI crude oil futures for delivery in November 2024 fell by $0.33 per barrel (-0.45%), settling at $73.24 per barrel; the Brent crude oil futures for delivery in December 2024 fell by $0.60 per barrel (-0.78%), settling at $76.58 per barrel. The Brent-WTI spread was $3.34 per barrel, narrowing by $0.27 per barrel from the previous day.

Shanghai crude oil futures prices declined, with the main contract SC2411 falling by 13.1 yuan per barrel (-2.3%), settling at 567 yuan per barrel, equivalent to $80.35 per barrel. All contracts traded a total of 222,210 lots, with the open interest increasing by 3,805 lots to 47,072 lots. The main contract traded 140,540 lots, with the open interest increasing by 2,248 lots to 22,127 lots.

Murban crude oil futures prices fell by $0.68 per barrel (-0.9%), settling at $76.65 per barrel, with all contracts trading a total of 38,949 lots.

In the Singapore market, the crack spreads for gasoline, diesel, jet fuel, and low-sulfur marine fuel were $4.65 per barrel (-0.12), $13.44 per barrel (+0.03), $12.27 per barrel (-0.38), and $8.73 per barrel (+0.08), respectively.

International oil market highlights:

(1) Producer dynamics

Kazakhstan: Kazakhstan's daily oil production decreased by 13% as the Kashagan oil field began maintenance.

Russia: According to Interfax, Russian oil companies are discussing a diesel export ban for non-producers.

(2) Institutional viewsCiti: It is expected that the Reserve Bank of New Zealand will cut interest rates by 75 basis points in November, higher than the previously forecasted 50 basis points. With the unemployment rate rising, the Monetary Policy Committee will again increase the pace of easing at the November policy meeting. The terminal interest rate for next year is expected to remain at 2.75%, and it will be achieved a quarter earlier. Given that other central banks are also easing monetary policy, a 75 basis point rate cut is "not unprecedented".

OCBC Singapore: Although inflation has not been completely ruled out, a 50 basis point rate cut is not the norm, and further reductions in the US federal funds rate from now on do not require an economic recession. The base forecast remains that the federal funds rate will be cut by 25 basis points at the FOMC meetings in November and December, for a total reduction of 125 basis points in 2025.