Outlook: Energies are lower this morning, primarily driven by a higher-than-expected CPI number. US CPI fell from 8.3% to 8.2% when expectations were a drop to 8.1%. With inflation showing resilience to the current rate hikes, the Fed is more likely to maintain a hawkish stance with future interest rate decisions. The IEA lowered its 2023 global demand forecast which followed the EIA lowering its US oil demand forecast a day prior. Lingering recessionary threats have analysts increasing bets for some level of demand destruction throughout 2023. The EIA will report inventories this morning which will give us a look at where current demand sits. The API survey revealed a larger-than-expected build in crude and a larger-than-expected draw in diesel which supports the diesel crack spreads surge over the last two weeks. The diesel crack spread closed at all-time highs yesterday as heating demand picks up domestically along with expectations of sustained exports to support the EU.
Crude
- The IEA lowered its 2023 global oil demand forecast by 470,000 bpd to 101.3 bpd.
- 95% of 2023 oil demand will be accounted for by Asia according to the IEA.
- The IEA estimates global oil demand will grow 1.9 million bpd in 2022.
- The IEA says Russian oil exports fell 230,000 bpd to 7.5 million bpd in September.
- WTI’s 100-day moving average crossed its 200-day moving average.
- The volume of bullish options bets on WTI jumped to the highest level since 2019 this week.
- The EIA will report inventories at 10:00 CT.
- The API survey showed a 7.1 million barrel build in crude stocks last week.
- Reuters estimates crude inventories fell by 1.9 million barrels last week.
- US CPI was reported at 8.2%, down from 8.3%. Estimates were calling for a drop to 8.1%.
- As of 8:23 am CST: Brent crude oil down $0.89 to $91.56, US dollar index up $0.428 to 113.748 while the nearby e-mini S&P 500 futures contract is down 79.25 to 3509.00.
Diesel
- The diesel crack closed at a record level of $77.91 yesterday.
- The API survey showed a 4.56 million barrel draw in diesel stocks last week.
- Reuters estimates diesel inventories fell by 2.1 million barrels last week.
Gasoline
- The API survey showed gasoline inventories rose by 2 million barrels last week.
- Reuters estimates gasoline inventories fell by 1.8 million barrels last week.
Propane
- Conway is trading at $0.8625 and Belvieu is trading at $0.8525.
- Conway is trading at 41% of crude.
- The US is exporting 56% of production as of 9/30/22.
Natural Gas
- Total US gas demand increased to 89.4 Bcf/d.
- Total US dry production increased to 97.4 Bcf/d.
- Overnight weather runs added 2 HDDs through the two-week forecast.
- The EIA is expected to report a 123 Bcf injection into storage last week.
- The 5-year average injection is 82 Bcf.
Russian Revenues: Russia’s oil-export revenue shrank to 15.3 billion in September and its lowest level posted this year according to the IEA. September revenue fell 3.2 billion or 17.3% from a month earlier. Crude exports fell by 260,000 bpd month-over-month, contributing to the revenue loss along with falling prices.
