Outlook: Markets are again mixed this morning with WTI and RBOB lower while ULSD and NG move marginally higher. Continuous WTI managed to close below its 50-day moving average yesterday which could signal further weakness. Additionally, China saw an increase in covid cases today which continues to grab the spotlight as it poses a significant threat to oil demand. JPMorgan dropped its 2022 and 2023 growth forecast for China today anticipating lockdowns to leave a long-lasting effect on their economy. The markets may find direction following the US producer price index this morning at 7:30 CT before turning to fundamentals with the API reporting this afternoon and the EIA confirming data tomorrow morning.
Crude
- China reports 17,772 new covid cases today, up from 16,072 yesterday.
- JPMorgan cut its fourth-quarter forecasts to 2.4% quarter-on-quarter from 5.2% prior and its full-year forecast to 2.9% from 3.1%.
- The IEA estimates Russian oil output will fall to 1.4 million bpd next year as the EU’s ban on seaborne exports comes into effect.
- The IEA forecast oil demand growth will fall from 2.1 million bpd in 2022 to 1.6 million bpd in 2023.
- OPEC production fell by 30,000 bpd in October to 29.8 million bpd while non-OPEC members participating in the OPEC+ deal increased production by 100,000 more bpd to 15.12 million bpd according to the IEA.
- The IEA forecast OPEC+ production will fall by 800,000 bpd in November when the 2 million bpd cut takes effect.
- Oil output in the Permian Basin is set to hit another record of 5.499 million bpd in December according to the EIA.
- US crude oil output in shale regions is set to rise 91,000 bpd to 9.191 million bpd in December according to the EIA.
- US waterborne crude imports fell by 470,500 bpd to 1.86 million bpd last week.
- Reuters estimates crude inventories fell by 300,000 barrels last week.
- The API will report their inventory survey at 3:30 CT.
- As of 7:18 am CST: Brent crude oil down $0.35 to $92.79, US dollar index down $0.521 to 106.139 while the nearby e-mini S&P 500 futures contract is up 45.25 to 4010.00.
Diesel
- Reuters estimates diesel inventories fell by 800,000 barrels last week.
- China is expected to maintain its refinery processing rate of 65% to 70% in November and increase exports according to Chinese consultancy JLC.
- Waterborne diesel imports fell by 120,000 bpd to 91,900 bpd.
Gasoline
- Reuters estimates gasoline inventories rose by 300,000 barrels last week.
- Waterborne gasoline imports rose by 153,000 bpd to 483,000 bpd.
Propane
- Conway is trading at .9100 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.
Natural Gas
- Total US gas demand rose to 112.6 Bcf/d.
- Total US dry production up to 97.5 Bcf/d.
- Overnight weather runs added 14 HDDs through the two-week forecast.
- US natural gas rig count remained flat last week.
Russian Seaborne Exports: Russia’s seaborne fuel exports rose to their highest level since 2017 this month. The average daily exports of oil products have risen 22% in the first 10 days of the month to 3.17 million barrels according to Kpler.
