Outlook: Yesterday WTI settled above $70, the first time that has occurred since August 3. Ongoing production outages in the Gulf of Mexico and a weaker dollar act to provide a modest amount of support this morning. Nicholas made landfall in Sargent, Texas as a Category 1 before being quickly downgraded to a Tropical Strom. So far reports of damage to energy infrastructure has been limited, but Colonial was forced to shutdown 2 main lines due to power issues.
Crude
- About 44% of Gulf of Mexico oil production, or 800,000 bpd, remained offline yesterday.
- The IEA released its monthly report and suggested 2022 demand up 3.2 million bpd y/y to 99.4 million bpd, below OPEC’s 100.8 million bpd estimate.
- The IEA showed OECD oil stocks fell 34.4 million barrels in July to 2.85 million barrels, which is 120 million barrels below the 2015-2019 average.
- China will sell 7.4 million barrels from its reserves on September 24.
- The U.S. Consumer Price Index for August was up 5.3% y/y, slightly under 5.4% anticipated. The CPI gauges what consumers pay for goods such as groceries, clothes, restaurant meals, vehicles and recreation.
- Daily new confirmed Covid cases in the US have fallen 12% over the last week. This follows a 2% decline the prior week.
- Average rates for Capesize carriers, which carry bulk commodities such as iron ore, grains and coal rose by $6,700 yesterday to $53,700/day, the highest since 2010.
- As of 9:37 am CDT: November Brent is $0.43 higher to $73.86, the U.S. dollar index is 0.136 lower to 92.540 while the nearby e-mini S&P 500 futures contract is down 15.00 at 4454.00.
Diesel
- ULSD is fading off its highs as the morning progresses. It’s been a small trading range so far today with nearby ULSD up 29 points to 2.1612.
- It won’t be until 2043 until demand for fossil fuels falls below 2019 levels, according to IHS Markit Ltd.
Gasoline
- The October gasoline crack spread is up 2% or 43 cents to $20.74 with strength derived from a shutdown of Lines 1 and 2 of the Colonial Pipeline due to a power outage related to Hurricane Nicholas.
- Analysts suggest holiday shopping demand will be strong this year as stores are expected to be open and shoppers are more willing to venture out.
Propane
- Exports of propane/ethane from the U.S. fell 48,000 bpd to in the 7 days ending September 13 to 1.71 million bpd, according to vessel tracking data analyzed by Bloomber NEF.
Natural Gas
- An estimated 30 bcf of natural gas has been shut-in so far the Gulf of Mexico due to Hurricane Ida.
- In reference to Thursday’s Natural Gas storage report, the 5-year average is a 79 bcf increase and estimates call for a number close to that for this week.
- The 6-10 day forecast calls for much above normal temperatures in the Northeast while the West is cooler than normal.
Weekly Continuous Natural Gas:
