Outlook: Oil is on pace for a third weekly drop amid a stronger dollar and the prospect the White House may do something in an attempt to pull down gasoline prices. A shift to excess global supply starting in 2022 is likely, according to this week’s EIA monthly report. In the meantime we are viewing continued draws, as evidenced by the EIA’s weekly report.
Crude
- The Preliminary University of Michigan Consumer Sentiment survey for November fell to 66.8 from 71.7 in October and below the forecast range of 69.5 to 75.0. “Consumer sentiment fell in early November to its lowest level in a decade due to an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation,” comments from the report said. “Rising prices for homes, vehicles, and durables were reported more frequently than any other time in more than half a century.”
- As Iran and the U.S. prepare to resume nuclear negotiations, Iran is demanding the U.S. guarantee it wont back out of the deal again. Meanwhile, the Director General of the IAEA said Iran has not made an invitation for officials seeking access to nuclear facilities and to probe for uranium detection at undeclared sites.
- Five million barrels of Brent Dec22 $250/$300 call spreads traded yesterday, a wager on sharply higher prices.
- Some White House aides are said to be lobbying for an SPR release or even a ban on U.S. crude exports but there has been difficulty in gaining consensus.
- Genscape showed Cushing, OK stocks fell 36,000 barrels from the Nov 5 to Nov 9 time period.
- As of 10:08 am CST: Brent crude oil down $0.61 at $82.25, US dollar index down 0.034 to 95.143 while the nearby e-mini S&P 500 futures contract is up 20.075 at 4,663.75.
Diesel
- ULSD futures across much of its curve fell to the 50-day moving average and so far has bounced. The dip in recent weeks may be viewed as a buying opportunity into next year and even beyond. Consider the May 22 ULSD futures at 2.3125 is off more than 15 cents from its October peak.
Gasoline
- U.K. drivers are paying an average of $7.40/gallon, a record. California gasoline prices for regular grade averages $4.65/gallon, 2 cents below the 2012 record.
- The market has long awaited requirements for the Renewable Fuel Standard. Pro Farmer reports EPA Administrator Michael Regan said the blending requirements wont favor either oil or agriculture, which leads some to believe an announcement may be coming as soon as today.
Propane
- A setback in international propane prices helped pull US propane values sharply lower in early trade to the tune of near 6 cents but subsequent trade has pulled values closer to even on the day.
Natural Gas
- Henry Hub Natural gas futures are retracing a large portion of yesterday’s gains as short term views favor neutral to slightly warmer than normal temperatures. The current deficit against the five-year is near 3% and the market is coming to a point where seasonal weather shifts will take on greater importance. European gas prices as referenced by the Dutch TTF contract remain buoyed today with gains near 3% amid concern Belarus may limit or halt natural gas flow from Russia into the EU due to sanctions threats.
