Outlook: Energies are pushing higher to start the morning catching a tailwind from support macros. The US dollar index is seeing significant weakness today down nearly 1% which is supportive for commodities priced in the currency. Global supply concerns reentered the conversation after various countries expressed doubts regarding Iran’s intentions to revive the nuclear deal. Additionally, lower crude prices may provide less urgency for the US to negotiate with Iran on conflicting points to get the deal done. The EU’s oil embargo on Russian oil goes into effect on December 5th along with the G7’s proposed price cap. The market may find continued strength as the deadline approaches if additional supply isn’t introduced leading up to the embargo.
Crude
- France, Britain, and Germany said on Saturday they had “serious doubts” about Iran’s intentions to revive the nuclear deal.
- India plans to provide $2.5 billion dollars to state-run refiners after reporting quarterly losses amid elevated crude prices.
- The US Treasury warned that the cap on Russian oil could send US gas prices higher this winter.
- OPEC will publish its monthly oil report tomorrow morning.
- China’s President Xi is expected to meet with President Putin at the Shanghai Cooperation Organization’s summit, marking Zi’s first time outside of China in two years.
- A weaker dollar is providing support to energies today.
- Managed money participants crude net length decreased by 22k lots through last Tuesday.
- Baker Hughes reported US oil rigs fell by 5 last week.
- As of 9:37 am CST: Brent crude oil up $1.95 to $94.79, US dollar index down $0.820 to 108.183 while the nearby e-mini S&P 500 futures contract is up 47.25 to 4114.00.
Diesel
- Managed money traders reduced their net long positions by 8,287 contracts last week.
- Nearby diesel is testing its 50-day moving average at $3.6106.
Gasoline
- Managed money traders reduced their net longs positions by 2,941 contracts last week.
- Nearby RBOB is testing its 9-day moving average for the first time in two weeks at $2.4579
Propane
- Conway is trading at $1.0500 and Belvieu is trading at $1.0450.
- Conway is trading at 51% of crude.
- The US is exporting 50% of production as of 9/2/22.
Natural Gas
- Total US gas demand decreased to 93.2 Bcf/d yesterday.
- Total dry production increased to 96.4 Bcf/d.
- Overnight weather runs removed 8.5 CDD to the two-week forecast.
- US natural gas rigs increased by 4 last week.
Energy Stocks: Two-thirds of respondents to an MLIV Pulse survey, which includes portfolio managers and retail investors, plan to increase exposure to the sector over the next six months. The surge in electric and natural gas prices along with shortages across key fuels this winter is driving the bullish sentiment.
