Outlook: Crude and products are working lower today and has January crude back below $80. The G7 has proposed a seaborne price cap on Russian oil between $65-$70 which would go into effect on December 5th. US officials said this figure will be adjusted as prices fluctuate to maintain its purpose of limiting Russian oil revenue. China continues to see new covid cases and has slowly been tightening lockdown measures throughout major cities on a daily basis providing downward market pressure. There is a plethora of fundamental and financial reports today that could provide volatility to the market. Trade volumes may grow thin with many traders taking off for the holiday and could exaggerate price moves if we see unexpected results.
Crude
- The G7 nations are looking to cap Russian seaborne oil between $65-$70, according to an EU official.
- Russian Urals delivered to NW Europe is trading around $62-$63 today.
- The OECD forecast world economic growth will slow from 3.1% this year to 2.2% next year.
- Reuters estimates crude inventories fell by 2.2 million barrels last week.
- An industry group survey showed a 4.8 million barrel draw last week.
- The US SPR fell by 1.6 million barrels last week.
- The EIA will report inventories at 9:30 CT.
- Baker Hughes will report its rig count at 12:00 CT
- Michigan Consumer Sentiment will be reported at 9:00 CT
- The Fed is scheduled to speak today at 1:00 CT
- As of 8:12 am CST: Brent crude oil down $2.89 to $85.47, US dollar index down $0.372 to 106.850 while the nearby e-mini S&P 500 futures contract is up 2.25 to 4008.00.
Diesel
- Reuters estimates distillate inventories fell by 200,000 barrels last week.
- An industry group survey showed a 1.1 million barrel build in distillate stocks last week.
Gasoline
- Reuters estimates gasoline inventories rose by 600,000 barrels last week.
- An industry group survey showed gasoline stocks fell by 400,000 barrels last week.
Propane
- Conway is trading at .8550 while Belvieu is trading at .8475.
- Conway is trading at 44% of crude.
- The US is exporting 61% of production as of 11/11/22.
- OPIS estimates propane inventories fell 33,000 barrels last week.
Natural Gas
- Total US gas demand fell to 116.0 Bcf/d.
- Total US dry production up to 97.9 Bcf/d.
- Overnight weather runs added HDDs through the two-week forecast.
- The EIA is expected to report an 84 Bcf draw last week.
- Yesterday the European Commission drafted a natural gas price cap level of 275 euros/MWh, well above current levels around 120 euros/MWh.
Continuous WTI: Nearby crude is finding downward pressure again today after a technical bounce yesterday. The G7 price cap coming in above current Urals delivery to Europe along with increased lockdown measures in China are limiting upside moves.
