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First Look - Asian refiners expect oil price decline to slow down amid Middle East tensions

Oil is up nearly $1/Bbl, reversing losses from yesterday
- Yesterday, the EIA reported a larger crude inventory build than analysts expected
Asian refiners expect oil price decline to slow down amid Middle East tensions (S&P)
- Asian refiners expect oil price decline to slow due to Middle East tensions, aiding in hedging and stockpile management despite the current downward trend
- Price stability within the $75-$85/Bbl range is ideal for protecting inventory valuations and reducing volatility in refining margins
- Refiners are focused on fragile refining margins and demand fundamentals rather than crude supply issues, with shipping costs impacting margins
EIA cuts oil demand forecast
- The EIA reduced its forecast for global oil demand growth and slashed Brent crude oil price forecasts for 2025 due to weaker consumption growth in developed economies
- EIA forecasts global oil demand to grow by 1.3 MMBbl/d in 2025, a decrease from previous estimates
- Brent crude oil price forecast reduced to an average of $78 per barrel in 2025, $7 lower than the previous forecast

Gas trades lower ahead of storage data
- Prompt gas was 4.8c lower to $2.612/MMBtu (As of 7:47 AM)
- Winter ‘24/’25 strip is down 3.5c to $3.038, and the Summer ’25 strip is down 3.6c to $3.111
- Lower 48 temperatures remain unchanged, with offsetting regional shifts and a warmer South Central forecast, while the European Ensemble forecasts a brief cold spell next week followed by near-normal conditions (Criterion)
- Hurricane Milton made landfall south of Tampa as a Category 3 storm, causing significant flooding and power outages
  - The storm spared major metropolitan areas from a direct hit but still caused widespread damage
Last year’s warm winter could mean cheaper heating this year, says WSJ
- Natural gas oversupply is expected to keep heating costs low for U.S. households this winter, despite colder weather forecasts
- Homes heated with natural gas are estimated to spend an average of $602, only slightly higher than last year, while electrically heated homes may see a 2% increase in costs, according to the EIA
- The boom in renewable energy and lower natural gas prices, which are down 21% Y-o-Y, have moderated power costs, even though power consumption surged during a hot summer
- Analysts predict weak gas prices in the near term, with storage levels still high and producers waiting for better prices before resuming full production