Outlook: Crude and products are higher today while natural gas observes marginal losses. A weaker dollar coupled with markets tipping oversold may be providing a buying opportunity today. Hurricane Ian will be in the spotlight this week with it set to make landfall in the eastern gulf later today. With the current track, major oil and refinery infrastructure is expected to be unaffected while a few rigs near the eastern gulf have been evacuated. Reuters is calling for a build in crude and gasoline, and a draw in diesel. Harvest is underway for the majority of the US and is estimated at 12% complete, which compares to 17% last year and 14% for the five-year average for this week. Diesel demand should see an uptick with harvest progressing into full swing with winter heating demand following closely behind.
Crude
- The Buy Low and Sell High legislation was introduced yesterday which would buy oil below $60 and sell oil above $90 in a new Economic Petroleum Reserve.
- Goldman Sachs lowered its WTI forecast for the rest of the year to $95, down from $120.
- Hurricane Ian is set to make landfall over the next day with Tampa at the center of the probability track.
- Northern Europe is importing under 300,000 bpd of Russian products with the full embargo just two months away. The region imported roughly 1.2 million bpd prior to the war.
- Roughly half of France’s 1.15 million bpd of refining capacity is offline due to wage strikes.
- US waterborne crude imports rose 453,600 bpd to 2.99 million bpd last week.
- WTI closed below its lower Bollinger band yesterday.
- The US dollar index is off around 500 ticks to start the day.
- Reuters estimates crude inventories rose by 300,000 barrels last week.
- The API will report its inventory survey at 3:30 CT.
- As of 8:51 am CST: Brent crude oil up $2.20 to $86.26, US dollar index down $0.423 to 113.680 while the nearby e-mini S&P 500 futures contract is up 40.25 to 3710.00.
Diesel
- Reuters estimates diesel inventories fell by 1.3 million barrels last week.
- US waterborne diesel imports rose 4,800 bpd to 93,800 bpd last week.
Gasoline
- Reuters estimates gasoline inventories rose by 400,000 barrels last week.
- US waterborne gas imports fell 100,000 bpd to 538,000 bpd last week.
- The Nymex gasoline crack rose to its highest level since August 23rd.
Propane
- Conway is trading at $0.8850 and Belvieu is trading at $0.8700.
- Conway is trading at 47% of crude.
- The US is exporting 49% of production as of 9/16/22.
- US corn rated Good/Excellent remained steady at 52% this week.
- US corn harvest is 12% complete.
Natural Gas
- Total US gas demand increased to 87.7 Bcf/d yesterday.
- Total dry production increased to 96.7 Bcf/d.
- Overnight weather runs removed 2 CDDs through the two-week forecast.
- Leaks have been reported in Nordstream 1 & 2 with the EU speculating that sabotage being the cause.
Gas Prices: Gasoline prices have been on a steady decline since peaking in mid-June. The declines may be coming to a halt short term with gasoline cracks at their highest level since late August. The prompt gasoline crack is back above $21 today and may work to fill some of the gap established between $23.05 and $34.77.
