Morning Highlights
Morning Highlights

10-28-22 Energies mixed, diesel squeezes higher ahead of November contract expiration...

Riley Schwieger

Oct 28, 2022

Outlook: Energies are mixed this morning with WTI and RBOB observing losses while ULSD remains strong. China’s covid zero policy is bringing bearish pressure yet again this morning as covid cases continue to rise. Various lockdown measures involving school and restaurant closures are already in place and further tightening is expected if cases continue to climb. While China’s domestic demand is at risk, their renewed export quotas have allowed for oil imports to remain strong. In the US, core PCE inflation rose less than expected at 5.1%. The Personal Consumption Expenditures Index excludes food and energy prices in its measure of inflation. The US dollar has fell ~500 ticks off its morning highs following the report and sits unchanged. The Fed’s interest rate decision will be the focus next week when they meet Tuesday and Wednesday. Current expectations are the Fed will increase rates by 75 basis points.


  • China registered 1,506 new covid cases yesterday, marking the third consecutive day reporting over 1000 new cases.
  • Guangzhou, Wuhan, Xining are among the cities tightening covid measures this week.
  • The IMF expects China’s growth to slow to 3.2% this year after an 8.1% rise in 2021.
  • China has purchased over 10 million barrels of oil since late last week.
  • Germany’s economy grew unexpectedly in Q3 rising by .3%.
  • US annual Core PCE inflation rose to 5.1% in September vs 5.2% expected.
  • Michigan Consumer Sentiment will be reported at 9:00 CT.
  • Baker Hughes will report its rig count at 12:00 CT.
  • As of 8:24 am CST: Brent crude oil down $0.91 to $96.05, US dollar index down $0.022 to 110.565 while the nearby e-mini S&P 500 futures contract is up 3.25 to 3822.00.


  • The Nov ULSD contract set a new contract high at $4.4986
  • The prompt diesel inverse rose to 77 cents this morning.


  • Nearby RBOB prices have risen around 30 cents this week.
  • The prompt gasoline spread settled at a multi-year high of 37 cents yesterday.
  • RBOB prices have rallied this week on positive economic sentiment and a reported increase in demand for last week.


  • Conway is trading at $0.8725 and Belvieu is trading at $0.8800.
  • Conway is trading at 41% of crude.
  • The US is exporting 71% of production as of 10/21/22.

Natural Gas

  • Total US gas demand rose to 94.9 Bcf/d.
  • Total US dry production rose to 96.9 Bcf/d.
  • Overnight weather runs removed 2 HDDs through the two-week forecast.
  • The EIA reported a build of 52 Bcf yesterday.
  • The five-year average injection for this time period is 66 Bcf.

Refinery Outages: Global refinery outages reached 3.47 million bpd last week according to Bloomberg data. Outages in the US fell to 712,000 bpd.