Outlook: Energies are working lower this morning maintaining the downtrend established to start the week. There have been no new developments out of China in regard to covid with cases climbing and the threat of lockdowns growing putting pressure on the market. The API reported a larger-than-expected build in crude inventories in their survey yesterday afternoon which pushed markets lower into the close. Both the API and Reuters are expecting over a 1 million barrel draw in diesel for last week. Additional attention may be drawn to East Coast inventories where there is a larger reliance on heating oil and a significant cold front working its way into the US this weekend. The EIA will release official data this morning at 9:30 CT.
Crude
- The EIA lowered its demand growth forecast for next year in yesterday’s Short Term Energy Outlook.
- The head of the IEA said OPEC’s decision to cut 2 million bpd of production will worsen the outlook for countries sliding toward a recession.
- China’s oil demand for the fourth quarter is expected to be higher than in the same period last year, according to Yan Jun, an official at CNOC.
- China’s September oil demand was at around 15.5 million bpd and its highest level in four years, according to Yan Jun.
- 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 survey showed crude inventories rose by 5.6 million barrels.
- The EIA will report inventories at 9:30 CT.
- As of 8:50 am CST: Brent crude oil down $1.39 to $93.97, US dollar index up $0.633 to 110.269 while the nearby e-mini S&P 500 futures contract is down 30.25 to 3805.00.
Diesel
- Reuters estimates diesel inventories fell by 1.4 million barrels last week.
- The API estimates diesel inventories fell by 1.7 million barrels.
- The EIA estimates that consumers who rely on heating oil for warmth can expect to pay 45% more this winter.
Gasoline
- Reuters estimates gasoline inventories fell by 1 million barrels last week.
- The API estimates gasoline inventories rose by 2.5 million barrels.
- There was a fire at Chevron’s 269kbpd refinery in El Segundo, California yesterday which was extinguished in two hours. Damages are unknown at this time.
Propane
- Conway is trading at .9350 while Belvieu is trading at .8950
- Conway is trading at 43% of crude.
- The US is exporting 57% of production as of 10/28/22.
- Propane inventories are expected to have risen by 600,000 barrels last week.
- US propane stocks are 16% higher than the same time last year.
Natural Gas
- Total US gas demand rose to 97.4 Bcf/d.
- Total US dry production flat to 96.2 Bcf/d.
- Overnight weather runs added 9 HDDs through the two-week forecast.
- The EIA expects natural gas prices to average $6 this winter.
EU Diesel Inventories: Diesel stocks in northwestern Europe are expected to hit their lowest levels in 12 years by the start of spring, according to Wood Mackenzie. With the EU’s embargo against Russia set for December, a sharp decline in inventories is forecast starting in January.
