Outlook: Crude is looking for direction to start the morning while diesel and gasoline hold marginal gains. The dynamic reflects the Reuters projection for inventory changes last week calling for a build in crude and a draw in both products. Product deficits have continued to grow with elevated refinery run rates unable to keep up with demand. Waterborne imports rose last week but haven’t proven to be enough to turn the tides. The API will release its survey this afternoon and the EIA will confirm values tomorrow morning. Outside markets may find volatility this week with US elections being held today. Any substantial moves could spill over into energy, especially if we see a large move in the US dollar.
Crude
- China has increased crude imports to over 2.5 million bpd in recent weeks in preparation for an eventual reopening, according to Goldman Sachs.
- December WTI is finding support at its 200-day moving average at $90.21.
- Continuous WTI traded above its upper Bollinger band yesterday before ultimately closing just below.
- China reported over 7,000 new covid cases today, up from 5,000 yesterday.
- Waterborne crude imports fell by 748,000 bpd to 2.34 million bpd.
- The US SPR fell by 3.6 million barrels to 396.2 million barrels last week.
- Reuters estimates crude inventories rose by 1.1 million barrels last week.
- The API will report its inventory survey at 3:30 CT.
- As of 8:32 am CST: Brent crude oil up $0.01 to $97.93, US dollar index up $0.165 to 110.285 while the nearby e-mini S&P 500 futures contract is up 0.25 to 3815.00.
Diesel
- Reuters estimates diesel inventories fell by 1.4 million barrels last week.
- The volume of diesel cargoes transported multiplied by the distance sailed, also known as ton-miles, will increase by 9.5% in 2023 representing the largest increase since 1993.
- Waterborne diesel imports rose by 111,000 bpd to 212,000 bpd last week.
Gasoline
- Reuters estimates gasoline inventories fell by 1 million barrels last week.
- US waterborne gasoline imports rose by 54,000 bpd to 314,900 bpd last week.
Propane
- Conway is trading at .9350 while Belvieu is trading at .9075
- Conway is trading at 42% of crude.
- The US is exporting 57% of production as of 10/28/22.
- Propane hubs finished the week at one-month highs.
- Colder weather should support propane demand over the next few weeks.
Natural Gas
- Total US gas demand rose to 93.0 Bcf/d.
- Total US dry production fell to 95.8 Bcf/d.
- Overnight weather runs added 5 HDDs through the two-week forecast.
- Natural gas inventories deficit to the 5-year average has fallen to just 3.7%.
December WTI: December crude is finding support near its 200-day moving average as its edged lower to start the week. A hold above this level may allow markets to continue on the recent uptrend.
