Outlook: Energies are seeing mixed trade this morning with mixed data coming out of China and a looming interest rate hike. China delayed its Q3 reporting this week however mobility indexes have signaled a drop in congestion on a weekly basis, but Beijing is considering a reduction in the quarantine period for visitors as a first sign of softening covid policy. Covid cases are still rising following the Golden Week holiday and any escalation to strict lockdowns could put significant bearish pressure on the market. The fast-approaching Russian oil embargo and proposed price cap remain bullish for the market however, FGE warns that without industry support, the price cap will not function and will only harm those that abide. FGE estimates a 2-3 million bpd cut to Russian supply could send oil to $120 or higher. The tug-of-war between recessionary signals and supply cuts will likely continue to provide volatility to the market.
Crude
- FGE says the US and EU should abandon the proposed Russian oil price cap due to having no support from industry and energy professionals.
- Beijing may consider cutting the quarantine period for visitors from 10 days to 7.
- Federal Reserve Bank of Philadelphia President Patrick Harker made hawkish comments yesterday regarding short-term interest rate hikes.
- Phillips 66 has not received all of the US sweet crude it contracted for October delivery eluding to a tightening market.
- For the first time in four years, there’s no US crude being exported to France due to the ongoing strikes.
- Baker Hughes will report its rig count at 12:00 CT.
- The Treasury 10-year yields have climbed to the highest level since 2007.
- As of 9:28 am CST: Brent crude oil up $0.78 to $93.16, US dollar index up $0.053 to 112.934 while the nearby e-mini S&P 500 futures contract is up 19.25 to 3694.00.
Diesel
- France’s waterborne imports of diesel-type fuel in October have already surpassed last month’s total.
- China’s planned exports of key oil products are at 4.41 million tons this month, which is triple the volume of September.
- The Colonial pipeline is fully booked to move diesel, heating oil, and jet fuel from the Gulf to the East coast at the end of the month.
Gasoline
- Amsterdam, Rotterdam, and Antwerp gasoline stocks report showed its lowest inventories in 15 weeks.
- Bloomberg mobility data shows road traffic levels in China fell by 5.4% week-over-week.
Propane
- Conway is trading at $0.8475 and Belvieu is trading at $0.8250.
- Conway is trading at 41% of crude.
- The US is exporting 61% of production as of 10/7/22.
Natural Gas
- Total US gas demand fell to 98.1 Bcf/d.
- Total US dry production fell to 96.3 Bcf/d.
- Overnight weather runs removed 19 HDDs through the two-week forecast.
- The EIA reported a natural gas injection of 111 Bcf into storage last week.
- The 5-year average injection is 73 Bcf.
Refinery Outages: Global refinery outages reached 3.51 million bpd last week according to Bloomberg data. Outages in the US were at 863,000 bpd.
