Outlook: Energy markets are mixed today with a lack of new market drivers in the headlines. There was anticipation for Chinese economic data this week to monitor the effects of their covid lockdowns however, they have delayed their Q3 reporting indefinitely. The delay does leave speculation that the data may be worse than expected, but it doesn’t appear concrete enough to cause selling. China is still ramping up exports to subsidize the economy but is also increasing covid testing in major cities which could reveal new lockdown measures. The US is considering another release of 10-15 million barrels from the SPR to fight rising energy prices. The SPR fell by 3.6 million barrels last week bringing the reserve down to 405 million barrels. Reuters estimates crude stocks rose by 1.6 million barrels last week, while diesel and gasoline inventories are expected to fall over 2 million barrels each. The API will report their survey this afternoon to give further insight into what the EIA may reveal on Wednesday.
Crude
- The Biden administration is moving toward another sale of around 10-15 million barrels of oil from the SPR.
- Two refiners in India have halted purchases of Russian oil to arrive after the EU’s embargo deadline.
- Kazakhstan’s oil field repair has been delayed to Nov 10, which will increase production by 200,000 bpd.
- China has delayed the release of third-quarter economic data indefinitely.
- Oil output in the Permian Basin is forecast to rise around 50,000 bpd to a record 5.45 million bpd this month according to the EIA.
- Waterborne crude imports fell by 1.05 million bpd to 1.94 million bpd last week.
- The SPR fell by 3.6 million barrels last week.
- The API will report their inventory survey at 3:30 CT.
- Reuters estimates crude stocks rose by 1.6 million barrels last week.
- As of 8:38 am CST: Brent crude oil down $0.88 to $90.74, US dollar index down $0.126 to 111.913 while the nearby e-mini S&P 500 futures contract is down 78.25 to 3767.00.
Diesel
- High premiums on the East Coast have diverted diesel cargoes from the EU to the US, carrying 1 million barrels.
- Reuters estimates diesel stocks fell by 2.2 million barrels last week.
- Waterborne diesel imports fell by 125,700 bpd last week to 73,300 bpd.
Gasoline
- Reuters estimates gasoline stocks fell by 2 million barrels last week.
- Waterborne gasoline imports fell by 219,000 bpd to 353,000 bpd last week.
Propane
- Conway is trading at $0.8225 and Belvieu is trading at $0.8100.
- Conway is trading at 40% of crude.
- The US is exporting 61% of production as of 10/7/22.
- At this time last year, Conway was trading at 75% of crude.
Natural Gas
- Total US gas demand increased to 94.2 Bcf/d.
- Total US dry production increased to 97.3 Bcf/d.
- Overnight weather runs added 5 HDDs through the two-week forecast.
Russian Exports: Flows to China, India, and Turkey peaked in June at 2.2 million bpd, and in the four weeks to Oct 14, that figure was down by 350,000 bpd. Shipments to Turkey have risen to the highest level for the year while tankers yet to show final destinations continue to grow. Overall Russian exports rose on a four-week average to their highest level since mid-August exceeding 3 million bpd for the first time in five weeks.
