Outlook: Energies are looking for direction to start the morning after a higher-than-expected CPI number erased earlier gains in the session. The dollar index is surging after August CPI was reported at 8.3%. While inflation did decline, estimates were calling for a larger pullback. With inflation not pulling back as quickly as expected, the Fed may lean towards another 75 bp hike when they meet this month after momentum was shifting towards a 50 bp hike prior to the report. OPEC published its monthly report today with relatively no surprises leaving its growth forecast unchanged. The headline worth noting was Saudi Arabia hit 11 million bpd of production which puts them in line with their production targets. The API will report their inventory survey this afternoon to give us insight into what we may see tomorrow for the EIA report. The back-to-back record draws out of the SPR will catch attention based on whether the barrels stayed domestic or were exported last week. Look for macro influences to carry a larger influence on the market than fundamental data short-term.
Crude
- OPEC left their 2022, and 2023 world oil demand growth forecast unchanged at 3.1 million bpd and 2.7 million bpd, respectively.
- OPEC’s monthly report showed August output rose by 618,000 bpd to 29.65 bpd.
- Saudi Arabia’s oil output reached 11 million bpd last month.
- Secretary of State Antony Blinken said it was unlikely the US and Iran would reach a new nuclear deal anytime soon.
- Morgan Stanley and UBS Group AG cut their near-term forecasts for crude by ~$15 a barrel due to concerns over global economic health.
- The Biden Administration announced increased regulations towards boosting offset drilling safety requirements while focusing on data reporting by companies.
- US waterborne imports fell by 350,000 bpd last week.
- The US SPR fell by a record 8.4 million barrels last week.
- The API will release its inventory survey at 3:30 CT.
- Reuters estimates crude inventories fell by 200,000 barrels last week.
- The US August Consumer Price Index fell to 8.3%, higher than the estimated 8.1%.
- As of 8:48 am CST: Brent crude oil up $0.03 to $94.03, US dollar index up $1.052 to 109.398 while the nearby e-mini S&P 500 futures contract is down 91.25 to 4019.00.
Diesel
- Reuters estimates diesel inventories rose by 600,000 barrels last week.
- The Dutch oil stockpiling agency is seeking 250,000 tons of diesel for delivery before the end of the year.
- US waterborne diesel imports fell by 47,000 bpd last week.
Gasoline
- Reuters estimates gasoline inventories fell by 800,000 barrels last week.
- US waterborne gasoline imports fell by 346,000 bpd last week.
Propane
- Conway is trading at $1.0675 and Belvieu is trading at $1.0600.
- 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 increased to 91.7 Bcf/d yesterday.
- Total dry production increased to 96.7 Bcf/d.
- Overnight weather runs added 11 CDD to the two-week forecast.
- The EIA released their DPR for September which had US gas production increasing by 606 mmcf/d between Sep22 and Oct22.
Russia’s Revenue: Russia’s oil and gas revenues account for more than a third of the nation’s budget. Their revenue fell to an equivalent $11.1 billion last month, its lowest level since June 2021 according to their finance ministry. The decline represents a 13% drop from July and a 3.4% drop from a year ago.
