Outlook: Energies are pushing higher this morning with crude and products up roughly 5%. News developing over the weekend that OPEC+ may cut production in excess of 1 million bpd has provided a bullish start to the week. Various analysts were projecting a cut between 500,000 bpd to 1 million bpd, which allowed this new higher-than-expected number to surprise the market. OPEC+ will meet in person for the first time since 2020 on Wednesday where they will officially announce their plans for November. Outside markets may be assisting the move today with the Dow and S&P both up nearly 2%. The UK announced a turnaround, moving away from a controversial plan to cut the 45% top income tax. Additionally, the ISM manufacturing PMI came in at 50.9 and below the expected 52.2. The US dollar has slid 400 ticks to a new low on the day post report.
Crude
- OPEC is considering a production cut of over 1 million bpd for November.
- OPEC+ will officially meet on Wednesday to finalize a cut.
- Oil exports from West Africa rose by 140,000 bpd in September to 3.26 million bpd.
- Kuwait’s crude exports to China rebounded to their highest level since 2016 at 733,000 bpd in September.
- Libya’s oil exports rose 24% in September to 1.16 million bpd, their highest level since July 2021.
- Global floating crude storage declined by 17% last week.
- The EU is aiming for a preliminary deal as soon as today for a new round of sanctions to punish Russia for illegally annexing territories in Ukraine.
- Baker Hughes reported US oil rigs rose by 2 to 604 last week.
- As of 9:37 am CST: Brent crude oil up $3.63 to $88.77, US dollar index down $0.430 to 111.679 while the nearby e-mini S&P 500 futures contract is up 64.25 to 3665.00.
Diesel
- Nymex heating oil money manager net longs fell to 12,000 lots, the smallest since April 19.
- India, the world’s third-biggest energy consumer, saw an increase in diesel sales by 1.3% in September over August and a 23% increase from last year.
Gasoline
- Spain’s gasoline sales in August exceeded their pre-pandemic rate by 7.5% according to Bloomberg.
- The front-month gasoline inverse increased by over 5 cents in September and now trades at ~10 cents.
Propane
- Conway is trading at $0.8975 and Belvieu is trading at $0.9050.
- Conway is trading at 47% of crude.
- The US is exporting 58% of production as of 9/23/22.
Natural Gas
- Total US gas demand decreased to 85.0 Bcf/d yesterday.
- Total dry production increased to 97.0 Bcf/d.
- Baker Hughes reported natural gas rigs fell by 1 to 159 last week.
OPEC+: OPEC announced a symbolic production cut of 100,000 bpd for October at there last meeting, while this time around they are expected to cut production in excess of 1 million bpd. The group is lagging behind in total output by more than 3.5 million bpd as of August. While output targets drop, we should still see overall production increase with previous cuts being unwound.
