Outlook: Energies are mixed to start the morning after what was a convincing push higher in yesterday’s session. Hurricane Ian has moved through the Gulf which should allow shut-down production to resume. Roughly 157,000 bpd of crude production was offline as of yesterday due to the hurricane. While the US moves to bring production back online, OPEC+ may look to cut production when they meet next Wednesday. Reuters reported this week that Russia may propose that OPEC+ should cut production by 1 million bpd while other analysts are expected a cut between 500,000-1 million bpd. Macro influences have continued to pressure energies with The Bank of England saying they would buy as many long-dated government bonds as needed after the Sterling plummeted last week. The US dollar index is up over 300 ticks to start the morning looking to rebound after a 2,000-tick reversal lower yesterday off its highs.
Crude
- OPEC+ has begun discussions about making an oil-output cut when it meets next week on October 5th.
- RBC said they expect OPEC+ to make a cut of between 500,000 to 1 million bpd.
- France is looking to replenish its stockpiles of diesel in the coming months ahead of winter. While unspecified, gallon amounts are expected to be in the millions.
- Roughly two-thirds of France’s refining capacity is offline or running at reduced capacity due to wage strikes.
- Hurricane Ian has been downgraded to a tropical storm as it continues its path NE through central Florida. The storm is expected to cause over $67 billion in damages.
- US crude production fell by 100,000 bpd to 12 million bpd, marking its first pullback in 6 weeks.
- The EIA reported a 215,000 build in crude stocks for last week.
- The US SPR fell by 4.6 million barrels last week.
- Crude exports were up 1.1 million bpd to 4.6 million bpd last week.
- As of 8:29 am CST: Brent crude oil up $0.70 to $90.02, US dollar index up $0.281 to 112.886 while the nearby e-mini S&P 500 futures contract is down 36.25 to 3695.00.
Diesel
- The EIA reported a 2.9-million-barrel draw in diesel stocks for last week.
- US diesel demand rose by 769,000 bpd to 4.17 million bpd and roughly 100,000 bpd over 5-year seasonal averages.
- Russian Diesel-type fuel exports out of the Baltic port of Primorsk are on course for a 40% drop month-over-month.
Gasoline
- The EIA reported a 2.4-million-barrel draw in gasoline stocks for last week.
- US gasoline demand rose by 503,000 bpd to 8.8 million bpd which is roughly 200,000 bpd below 5-year seasonal averages.
Propane
- Conway is trading at $0.9000 and Belvieu is trading at $0.8900.
- Conway is trading at 46% of crude.
- The US is exporting 58% of production as of 9/23/22.
- The EIA reported a 1.6-million-barrel build in propane stocks for last week.
- Midwest inventories rose by 796,000 barrels but remain at 5-year seasonal lows.
Natural Gas
- Total US gas demand decreased to 89.5 Bcf/d yesterday.
- Total dry production increased to 96.5 Bcf/d.
- Overnight weather runs added 11 HDDs through the two-week forecast.
- Another leak on the Nord Stream 1 and 2 has been found, increasing the total number of ruptures to four.
- Reuters is projection a 94 Bcf injection into storage last week.
- The 5-year average injection is 77 Bcf.
Continuous ULSD: The prompt ULSD contract is testing its 200-day moving average today after its rally higher in yesterday’s session. The October contract is set to expire tomorrow with over a 10-cent inverse to the November contract. The diesel market is poised to be well supported with harvest underway and winter following closely behind.
