Outlook: Energies are stretching higher this morning with WTI and RBOB up 4% while ULSD trades near even. Earlier this morning, a former Chinese disease control official reported that there are “substantial changes” coming to China’s Covid-zero policy. Easing of the policy could provide an immediate boost to China’s economy which would support oil demand. Market tightness is also providing support today with further progress being made with the proposed price cap on Russian oil. Russia has stated they will not deliver oil to those participating in the cap which could further lower available supply. Expect volatility to continue with shifts in focus between fundamental tightness and macroeconomic woes.
Crude
- Growing speculation that China may loosen covid restrictions is providing support to energies.
- Chinese crude imports rose to 9.3 million bpd in October representing a 500,000 bpd increase from September according to Bloomberg data.
- Saudi Aramco cut its Arab Light grade for December sales to Asia by 40 cents to $5.45/barrel.
- ConocoPhillips CEO Ryan Lance says US oil-supply growth is being hindered by “rapidly escalating” equipment costs and supply-chain snags.
- Yesterday the US DOE announced the sale of 15 million barrels of oil from the SPR, which was the final sale of the total 180 million barrels release announced in March.
- The prompt WTI contract may find resistance near the 100-day moving average at $92.46 after the rally this morning.
- The Bank of England warned on Thursday that Britain has entered a recession and their economy may not grow for another two years.
- US nonfarm payrolls were reported at 261,000 for October vs. the estimated 205,000.
- Baker Hughes will report its rig count at 12:00 CT.
- As of 8:44 am CST: Brent crude oil up $3.80 to $98.47, US dollar index down $1.265 to 111.665 while the nearby e-mini S&P 500 futures contract is up 17.25 to 3745.00.
Diesel
- China exported around 1.66 million tons of diesel in October according to Vortexa.
- December diesel has risen nearly 20 cents since the expiration of the November contract this week.
Gasoline
- ARA gasoline inventories fell by 2.5% while US inventories posted their 3rd straight weekly decline.
- Bloomberg reported a contraction in Chinese road activity while Chinese gasoline inventories rose to their highest level since May.
Propane
- Conway is trading at $0.8850 and Belvieu is trading at $0.8625.
- Conway is trading at 42% of crude.
- The US is exporting 57% of production as of 10/21/22.
Natural Gas
- Total US gas demand rose to 92.7 Bcf/d.
- Total US dry production rose to 96.4 Bcf/d.
- Overnight weather runs removed 2 HDDs through the two-week forecast.
- The EIA reported a natural gas build of 107 Bcf for last week.
- The five-year average injection for this time period is 45 Bcf.
Refinery Outages: Global refinery outages reached 2.85 million bpd last week according to Bloomberg data. Outages in the US fell to 365,000 bpd, down from 765,000 in the previous week.
