Market Insights > First Look

First Look - Chinese refining rates climb as maintenance subsides

Oil heads for a weekly decline amid a strong dollar and calls for oversupply in 2025
- WTI prices have fallen more than $2/Bbl this week, with prices trading near the bottom of the recent trading range
Chinese refiners return from maintenance (BBG)
- Refinery throughput rates in China rose last month as some refiners returned from maintenance, although processing rates remain lower on a seasonal basis
- Weak margins driven by low demand for transportation fuels have reduced demand for crude in China, which has weighed on global oil markets
- This weakness in China has led forecasters to reduce their expectations for oil demand in 2025, potentially leading to an oversupplied market and weaker prices

Nymex Henry Hub gas prices continued to be quite sensitive to shifts in weather forecasts
- The December contract fell 20c to $2.785 Thursday as yesterday’s mid-day American model run showed a loss of 44 HDDs (CWG)
- Contributing to the bearish weather model changes as the weekly government storage report came in bearish
The EIA reported a 42 Bcf injection in underground storage for the week ended November 8
- The 42 Bcf build was slightly larger than the average surveyed amount of 39 and also more than the five-year average of 29 Bcf
- Storage for the Lower 48 now totals 3,974 Bcf, just shy of 4 Tcf, a level not crossed since 2016
- AEGIS notes that the high level of storage entering this winter has pushed the bullish narrative further out in time
  - We have been neutral on the Cal ‘25 gas strip for a while now, with the view that 1H ’25 was bearish the curve and 2H ’25 had more chances to be bullish as new LNG stacks up
  - The April ’25 contract in September hit $3.43/MMbtu and now trades at $2.65/MMbtu as the winter ‘24/25 strip has materialized lower with high storage
  - AEGIS had been bearish this winter for a long time, as this fed our bearish outlook on the 1H of Cal ‘25