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Outlook: Another day of weaker headline trade for the energy markets this morning. Prices have somewhat recovered from overnight lows, but remain in the red. Focus currently remains on several recently released headlines discussing current tightness in the markets and potential solutions. Russia announced yesterday that record volumes of natural gas could possibly be exported to Europe to help ease their natural gas crisis. Additionally, the U.S. is also considering releasing supplies from the strategic petroleum reserve to aid in tightness as well. U.S. Energy Secretary Granholm also stated that the U.S. could implement an export ban in order to keep supplies in the U.S. and help temper domestic fuel prices. Currently both situations are being viewed as just possibilities at this point, but if realized, some analysts believe new supplies will limit further gains.

Crude

• According to the financial times, U.S. Energy Secretary Jennifer Granholm stated that the United States is considering tapping into the strategic petroleum reserve in order to ease high gasoline prices.
• Weakness in the natural gas market continues to stem from reports that Russia may manage to send additional gas supplies to Europe and help ease supply tightness, in turn also resulting in less crude demand for substitution.
• Russian Deputy Energy Minister Sorokin stated in a conference that the economy is recovering faster than expected and that OPEC+ should not allow the market to overheat.
• Royal Dutch Shell reported that Hurricane Ida hurt its third quarter earnings by $400 million.
• The October crude oil contract is trading $0.42 lower at $77.01. The 20-day and 100-day moving averages are $73.71 and $69.31 respectively. The 14-day RSI is 66.01%.
• As of 8:30 am CST: October Brent is down $0.22 at $80.86 and the U.S. dollar index is 0.019 lower at 94.247 while the nearby e-mini S&P 500 futures contract is up 33.5 points at 4387.5.

Diesel

• Asian gasoil prices are seen hitting three year highs and are expected to continue to outperform other refined products in Asia through year-end. Demand from industry and power generators due to natural gas tightness is seen as the main catalyst.
• The November ULSD contract is trading $0.0132 lower at $2.4288. The 20-day and 100-day moving averages are $2.2769 and $2.1366, respectively. The 14-day RSI is 70.80%.

Gasoline

• Panic buying of petrol in the U.K. has brought consumer spending back up to pre-pandemic levels, with work-related items, including road fuel, surging by 40% last week.
• The November RBOB contract is trading $0.0042 lower at $2.3040. The 20-day and 100-day moving averages are $2.1692 and $2.0586, respectively. The 14-day RSI is 67.86%.

Propane

• Supply fundamentals for the propane market remain bullish, currently inventories are about 29% lower than last year at this time and 20% below the 5-year avg. Weakness in crude and natural gas markets are currently leading to some spillover weakness for propane prices.
• At last look, Conway propane was trading down $0.03500 at $1.47500. Mt. Belvieu was trading down $0.04000 at $1.47000. 

After reports that the U.S. may release crude from its strategic reserve, U.S. crude was seen nearing its biggest discount to Brent in 17 months.