Outlook: Energies are pushing higher this morning but remain on track for their second consecutive weekly loss. WTI traded in a nine-dollar range this week as volatility remains strong. Macros, fundamentals, and technicals have all provided bearish pressure this week fueling a selloff that pushed crude to its lowest levels since January. Crude did slip into oversold territory trading below its lower Bollinger band which may be fueling some of the buying we are seeing to close the week out. China’s covid situation will continue to cast a shadow over the market with the economic impact likely outliving lockdowns. The US will look to take action against the forecasted surge in oil prices when the EU’s ban of Russian oil goes into effect at the end of the year. Expect thin liquidity to exacerbate price moves as sustained volatility has pushed traders out of the market.
- The Biden administration is considering additional SPR releases.
- The Biden administration said a petroleum export ban is still on the table.
- President Putin has threatened to halt oil and gas exports to Europe if price caps are imposed.
- Along with current lockdowns in China, the country has asked citizens to shun travel during upcoming holidays.
- A significantly weaker dollar is helping support crude and other commodities today.
- Crude exports fell by 534,000 bpd to 3.4 million bpd.
- The EIA reported Cushing stocks fell by 500,000 barrels last week.
- The EIA reported crude inventories rose by 8.8 million barrels last week.
- Baker Hughes will report their rig count at 12:00 CT.
- As of 9:12 am CST: Brent crude oil up $2.62 to $91.77, US dollar index down $0.830 to 108.877 while the nearby e-mini S&P 500 futures contract is up 44.25 to 4050.00.
- The EIA reported diesel inventories rose by 95,000 barrels last week.
- US diesel demand rose by 58,000 bpd last week.
- Global fuel oil stocks fell for the first time in three weeks and are at their lowest levels since 2018.
- The EIA reported gasoline inventories rose by 333,000 barrels last week.
- US gasoline demand rose by 136,000 bpd.
- The four-week rolling average of gasoline demand remains below the previous 5-year low.
- Conway is trading at $1.0500 and Belvieu is trading at $1.0450.
- Conway is trading at 53% of crude.
- The US is exporting 50% of production as of 9/2/22.
- The EIA reported propane stocks rose by 1.9 million barrels last week.
- Midwest inventories rose by 573,000 barrels.
- Total US gas demand decreased to 94.9 Bcf/d yesterday.
- Total dry production decreased to 96.2 Bcf/d.
- Overnight weather runs added 1.5 CDD to the two-week forecast.
- The EIA reported a 54 Bcf injection for last week.
- The 5-year average injection is 65 Bcf.
WTI Prompt Spread: WTI’s prompt spread can be a key gauge of the market’s health. After reaching 50 cents, the inverse found relief yesterday after a bearish inventory report which included a substantial build in crude inventories. With SPR releases scheduled to end next month, we could see the market tighten further and this spread widen out to new lows.