Outlook: Energies are starting the morning higher with WTI up 3% and products up over 2%. China announced its first step in easing covid restrictions which bolstered hopes for improved economic activity in the near future. While the modified quarantine restriction is minor, it represents a change in the narrative during a week when they’ve seen covid cases on the rise. China is the world's largest importer of crude and the market remains hypersensitive to any headline that affects their demand outlook. The market is also finding support from a weaker dollar which has worked sharply lower since the October CPI report was released yesterday morning. The market has found bullish momentum to end the week but remains susceptible to large swings driven by headline risk.
Crude
- China reduced the total time spent in quarantine for travelers by 2 days to 8 total, showing the first signs of easing covid measures.
- Saudi Arabia’s energy minister said OPEC+ would remain cautious on oil production. The next OPEC+ meeting is on December 4th.
- President Biden will meet in person with China’s President Xi for the first time in two years at next week's G-10 Summit.
- Tropical storm Nicole has made landfall in Florida causing blackouts and floods.
- US October CPI was reported at 7.7% yesterday vs 7.9% est.
- Baker Hughes will report their rig count at 12:00 CT.
- As of 9:12 am CST: Brent crude oil up $2.55 to $96.22, US dollar index down $1.137 to 107.069 while the nearby e-mini S&P 500 futures contract is down 16.25 to 3997.00.
Diesel
- Fuel oil costs rose 20% in October after falling 2.7% in September, according to the US Bureau of Labor Statistics.
- Energy stocks at the Amsterdam, Rotterdam and Antwerp hub fell by 1.4% over the past week, partly due to a sizable draw on fuel oil stocks.
Gasoline
- Nearby RBOB will look to close above its 50-day moving average of $2.5923 today.
- Nearby RBOB is on track for a weekly loss.
Propane
- Conway is trading at .9150 while Belvieu is trading at .8800
- Conway is trading at 43% of crude.
- The US is exporting 57% of production as of 11/4/22.
- The EIA reported a 311,000 barrel draw in propane stocks last week.
- Midwest stocks rose by 100,000 barrels.
Natural Gas
- Total US gas demand fell to 95.0 Bcf/d.
- Total US dry production flat to 96.8 Bcf/d.
- Overnight weather runs added 9 HDDs through the two-week forecast.
- The EIA reported a 79 Bcf injection into storage last week.
- The 5-year average injection for this time period is 20 Bcf.
Refinery Outages: Global refinery outages reached around 2.74 million bpd last week according to Bloomberg data. Outages in the US remained at 165,000 bpd.
