Outlook: Disappointing China manufacturing data and generally weaker views on demand over the next several months considering the economic backdrop is putting pressure on the energy complex. Despite the noise up front, deferred product values have been comparatively stable and considering the deeply backwardated structure on ULSD in particular, locking in physical contracts for next year may make sense.
Crude
- OPEC’s secretary general said the main reason for a cut in supplies announced earlier this month was an excess in supply in the marketplace. The group also sees the prospect for excess supplies into early 2023 due to economic growth forecasts.
- Weekly SPR data showed a 1.9 million barrel drop in stocks last week, the smallest drop since February. Stocks held in the SPR are now below 400 million barrels.
- Europe will have to rely on the US next year to make up for a shortfall of oil and products from Russia, Eni SpA’s CEO Claudio Descalzi said at the Adipec conference being held in Abu Dhabi this week.
- US crude production rose to 11.98 million bpd in August, up from 11.87 million bpd in July, monthly EIA data showed.
- In its annual world outlook, OPEC said world oil consumption will rise 13% to 109.50 million bpd in 2035 and will hold around that level for another decade.
- China’s NBS manufacting PMI fell to 49.2 in October when a 50.0 reading was expected. Non-Manufacturing PMI fell to 48.7 versus 51.9 anticipated.
- US companies investment in oil supply is “just not enough,” said Amos Hochstein, the US special envoy for energy.
- Data tracker KPLER showed OPEC oil output down 150,000 bpd in October to 28.689 million bpd.
- As of 10:45 am CST: Brent crude oil down $0.88 to $94.89, US dollar index up 0.866 to 111.618 while the nearby e-mini S&P 500 futures contract is down 14.00 points to 3897.25.
Diesel
- November ULSD futures expire today and the range has been massive from 4.1800 at its low and 4.6200 at its high with current trade down 11.48 cents on the day to 4.4350. The December contract is down 4.63 cents to 3.6992.
- Vitol’s CEO says high oil prices has impacted demand and anticipates demand will continue to falter over the next few months, which will keep prices in balance. He doesn’t anticipate a rebound in demand from China until the second half of 2023.
- Diesel exports from Russian Baltic and Black Sea ports are anticipated to rise 28% in November from October levels to 2.07 million tonnes, Industry data analyzed by Bloomberg suggests. The push comes before the EU ban on product imports begins in February when Russia will lose the 580,000 bpd EU market.
Gasoline
- November RBOB expires today and current trade stands at 2.8606, down 4.6 cents on the day. The December contract trades down 55 points to 2.5570.
- US gasoline demand rose in August to 9.1 million bpd, down 0.3% from August 2021. At 20.601 million bpd, total product demand in August was up 0.4% or 90,000 bpd versus last year.
Propane
- NGL’s are generally weaker today in sympathy to crude with Conway propane traded between 86.00 cents and 87.75 cents while Mont Belvieu barrels were changing hands between 85.375 cents and 85.875 cents.
Natural Gas
- Natural gas has moved aggressively higher with nearby futures up 48.4 cents to 6.168 due to a colder shift in the two week forecast which added 6 net Heating Degree Days.
Continuous Daily Natural Gas: Natural gas futures have been rising since hitting long term trendline support last week.
