Outlook: Energies are steady this morning while crude is on track for its third consecutive weekly loss. The US dollar pushed back above 110 this week putting pressure on commodities with CPI data showing inflation falling slower than expected. The Fed will meet next week when they are expected to increase interest rates by another 75 bps. China also continues to put bearish pressure on the market with ongoing covid lockdowns and the potential for an increased fuel export quota. Demand data from the EIA this week also showed recessionary signals with both gasoline and diesel demand down 10% compared to last year. The bearish sentiment in the market looks to be holding steady with continued developments pressuring the market to lower and quickly capping moves to the upside. Recessionary threats may continue to be a priority in controlling the trend of the market until a significant bullish driver resurfaces.
Crude
- Oil is headed for its third consecutive weekly decline.
- Refiners in China processed around 8 million bpd of crude last month, representing the lowest level since March 2020.
- The Fed will meet next week to announce the next round of interest rate hikes.
- Iran has agreed to export oil to Uzbekistan to revive Uzbek’s refineries. No volume has been given.
- Russia could find new markets for about half of the crude exports that will be banned by the EU embargo according to Kpler.
- Indonesia, Pakistan, Brazil, South Africa, Sri Lanka, and some countries in the Middle East could together buy as much as 1 million bpd of crude from Russia according to Kpler
- The world oil market has swung into a “large surplus” from a deficit seen earlier this year with an overhang of 1.82 million bpd this quarter, according to Standard Chartered analysts.
- Baker Hughes will report their rig count at 12:00 CT.
- Michigan consumer sentiment rose to 59.5 in Sep vs 58.2 the prior month.
- As of 9:15 am CST: Brent crude oil up $0.34 to $91.18, US dollar index up $0.220 to 109.959 while the nearby e-mini S&P 500 futures contract is down 36.25 to 3865.00.
Diesel
- The Netherlands is purchasing millions of barrels of diesel in preparation for winter.
- Diesel cracks have slipped to their lowest level since early August.
- If China’s export quota is approved for 10 million tons, as much as 800,000 bpd of additional fuel exports could enter the market.
- AAA reports the national average gas price at $3.692.
- RBOB prices have fallen nearly $2 since the middle of June.
Propane
- Conway is trading at $1.0550 and Belvieu is trading at $1.0425.
- Conway is trading at 51% of crude.
- The US is exporting 59% of production as of 9/9/22.
- The EIA reported propane inventories rose by 3.7 million barrels.
- Midwest inventories rose by 721,000 barrels.
Natural Gas
- Total US gas demand declined to 88.2 Bcf/d yesterday.
- Total dry production increased to 96.3 Bcf/d.
- Overnight weather runs removed 2 CDDs through the two-week forecast.
- The EIA reported a 77 Bcf injection.
- The five-year average injection is 82 Bcf.
Refinery Outages: Global refinery outages have been on the climb increasing to 937,000 bpd as of yesterday. The US has roughly 228,000 bpd offline while Russia has remained consistent at 67,000 bpd.
