Outlook: Energies are mixed this morning with WTI and RBOB finding strength while diesel lags lower. Earlier this morning, the complex was lower across the board with the dollar index pushing to new highs. A surging dollar has continued to pressure dollar-based commodities, weakening purchasing power of nearly all non-dollar currencies. Macro news should be relatively quiet until Thursday when the Eurozone releases consumer confidence data, Germany releases CPI, and the US releases initial jobless claim and GDP. OPEC+ is scheduled to meet next Wednesday with growing expectations that the group will increase production cuts. Gary Ross, CEO of Black Gold Investors spoke at the APPEC 2022 conference stating OPEC will have to cut output by 500,000 – 1 million bpd to defend prices are $90.
Crude
- Russia’s total oil output in September is up 1.3% from August, pumping 10.73 million bpd.
- The EU will likely delay their Russian price cap proposal with Cyprus and Hungary in opposition.
- The Biden Administration may rule out price caps for Russian petroleum products saying secondary sanctions are not necessary.
- Iran’s crude exports have fallen to 750,000 bpd, down from 1 million bpd.
- Last Friday, Nigeria’s oil minister Sylva advised that OPEC may increase production cuts should prices continue to fall below current levels.
- Global floating crude storage increased by 20% last week.
- US oil rigs increased by 3 last week to 602.
- Managed money participants crude net length increased by 12k lots through last Tuesday.
- As of 9:51 am CST: Brent crude oil up $1.09 to $87.24, US dollar index up $0.280 to 113.472 while the nearby e-mini S&P 500 futures contract is up 0.25 to 3709.00.
Diesel
- US weather is expected to be warm over the next two weeks, reducing the chance of early heating demand for diesel.
- Hurricane Ian is tracking for the west side of Florida working north but still holds the risk of disrupting gulf exports.
- US Diesel exports increased by 19% from the first half of 2021 to the first half of 2022.
Gasoline
- Chicago gasoline basis rose 62.5 cents last week due to the BP refinery fire.
- US gasoline imports from Europe fell 21% w/w to 281,000 bpd.
- US gasoline exports increased by 11% to a record 910,000 bpd in the first half of 2022.
Propane
- Conway is trading at $0.9100 and Belvieu is trading at $0.9000.
- Conway is trading at 49% of crude.
- The US is exporting 49% of production as of 9/16/22.
Natural Gas
- Total US gas demand decreased to 89.8 Bcf/d yesterday.
- Total dry production increased to 96.0 Bcf/d.
- Overnight weather runs added 8 HDDs and removed 4 CDDs through the two-week forecast.
- US natural gas rig count declined by 2 rigs last week.
Oil Open Interest: Low liquidity and declining open interest have been pinned for why volatility has remained high while from a historical standard open interest sits relatively elevated. The first nine months of 2022 have put the year in the top six of the last thirty for daily moves in Brent crude in excess of 5%. The three most volatile years by this measure were the crash of 2008, the covid pandemic, and the year Iraq invaded Kuwait.
