US Daily Oil Summary: Crude Inventories Fall

US crude inventories fell this week despite another unexpected drop in exports driven by a decline in imports while refinery runs fell and production remained unchanged on the week. Cuhsing stocks as expected rose again to the highest since mid-August.

• US gasoline and distillates demand edged higher last week, while the four-week demand figures show a small drop in gasoline demand and slightly larger drop in distillates demand.
• Higher US gasoline inventories are expected to contribute to lower US gasoline crack spreads in 2024 falling by 15 cents/gal compared with 2023 according to the EIA monthly oil report.
• US implied jet fuel demand in the week to Dec. 18 is forecast to rise by 1% to 1.56m b/d, according to BNEF.
• The Federal reserve kept the Fed funds rate unchanged at 5.25%-5.5%, the highest rate since 2001. Fed officials expect to lower rates by 75 basis points next year, a sharper rate of cuts than implied in September’s projections.
• USD: Immediate broad pressure on the greenback following the FOMC decision and projections. The dot plot seeing three cuts in 2024 is enough to see USDJPY shed the best part of 90 pips, briefly printing a low of 144.19.
• Core PPI inflation rates missed in November but didn’t see the same level of weakness as seen in core goods ex used cars in yesterday’s CPI. PPI ex food & energy - miss with a net downward revision: 0.03% M/M (cons 0.2) in Nov.