Outlook: The markets are looking for direction this morning while ULSD and Natural Gas see some weakness RBOB and WTI are seeing some strength. The EIA numbers should give us some direction for the day. The White House said that they will weigh the option of releasing more SPR barrels once the scheduled release of 180 million barrels is complete somewhere near the end of October or the beginning of November. The releases have been used to keep fuel prices lower for consumers but at some point, the small reserve could become a bullish point and push prices even higher.
Crude
- President Biden said that he is open to further SPR sales as prices remain elevated at the pump for consumers.
- Bloomberg’s recession prediction index hit 100% likelihood yesterday. That is the first time since the start of the pandemic that the index has reached this level.
- Europe is starting to see people hoarding energy ahead of a winter that could see a shortfall of energy products.
- Oil fields are starting to see some of the supply chain issues that have slowed their return of production ease up. Pipe and fitting wait times are coming back down according to Baker Hughes.
- Senior US officials are saying that the OPEC+ production cut came at the worst possible moment for the world economy.
- Mexico has hedged its oil profits at $68.70 dollars per barrel for 2023.
- The API is predicting a 1.3 million barrel draw.
- As of 9:23 am CST: Brent crude oil is up $1.30 at $91.33, US dollar index is up .664 at $112.790 while the nearby e-mini S&P 500 futures contract is up 4 to 3,736.75
Diesel
- Experts expect European diesel stocks to tank once the Russian cut-off goes into effect.
- Chinese exports have seen a huge uptick and that has provided some weakness to the market that we haven’t seen in quite some time due to the short inventories.
- The API is expecting a 1.1 million barrel draw.
Gasoline
- Gasoline is also in short supply but nowhere near to the degree that diesel is.
- The API is predicting a 2.2 million barrel draw.
Propane
- 0.8400 Conway and Belvieu at 0.8325
- Propane is expecting a 1 million barrel build.
Natural Gas
- Henry Hub Natural gas continues to fall off and is near at $5.50 per MMBtu.
- A warmer forecast through the end of October has demand seasonally low as many people have not turned the heat on in their houses.
US Gasoline Prices: Prices at the pump have slipped a lot from their highs earlier this summer but they have had a nice bounce off of those lows. I think that this is why the Whitehouse is looking to potentially release more barrels from the SPR.
