Outlook: The energy complex is mixed this morning with crude looking for direction, diesel up over 5 cents, and gasoline down nearly 2 cents. The EIA, IEA, and OPEC all expect a significant global supply deficit in the 4th quarter of 2023. The groups also shared a more bearish view for 2024 global oil demand making revisions lower from their previous reports. Macroeconomic tightening is the likely cause of lower revisions with interest rates at risk for staying higher for longer. August CPI came in slightly hotter than expected this morning but a strong consensus remains that the Fed will pause rate hikes next week. More uncertainty builds as we look toward their next meeting in November. Look for the EIA weekly inventory report to provide further influence this morning.
Crude
- The IEA released its monthly report this morning which left global oil demand growth for 2023 unchanged at 2.2 mbpd to 101.8 mbpd. 2024 demand was revised sharply lower by 600,000 bpd.
- The EIA revised its 2023 oil demand forecast higher by 50,000 bpd but lowered its 2024 oil demand forecast by 250,000 bpd.
- The EIA sees US crude output rising 870,000 bpd in 2023, up 20,000 bpd from its August outlook.
- The EIA expects Brent crude to average $93 in Q4 this year.
- US August CPI rose by 3.7% y/y vs 3.6% est.
- The US SPR rose by 300,000 barrels last week to 350.6 million barrels.
- Reuters estimates crude stocks fell by 1.9 million barrels last week.
- The API survey showed crude stocks rose by 1.174 million barrels last week.
- The EIA will report its weekly inventory report at 9:30 CT.
- As of 8:31 am CST: Brent crude oil up $0.13 to $92.18, US dollar index up $0.000 to 104.711 while the nearby e-mini S&P 500 futures contract is up 10.25 to 4475.00.
Diesel
- The API survey showed diesel stocks rose by 2.592 million barrels last week.
- Reuters estimates diesel stocks rose by 1.3 million barrels last week.
Gasoline
- The API survey showed gasoline stocks rose by 4.21 million barrels last week.
- Reuters estimates gasoline stocks rose by 200,000 barrels last week.
- The EIA revised its 2024 gasoline demand forecast lower by 200,000 bpd to 8.8 mbpd. Gasoline demand averaged 9.3 mbpd from 2016-2019.
Propane
- Conway is trading at .7713 while Belvieu is trading at .7834.
- Conway is trading at 37% of WTI.
- The US is exporting 63% of production as of 9/1/23.
- OPIS estimates crude stocks rose by 1.38 million barrels last week.
Natural Gas
- Overnight weather runs were unchanged through the two-week forecast.
- The EIA expects both natural gas production and demand will rise to record highs in 2023.
- Gas prices found strength yesterday on reports of a pipeline outage on a segment that feeds Henrey Hub.
Continuous Daily HO: Diesel is looking to take back the driver's seat today leading the complex higher. Diesel has lagged gasoline this week but gas has taken a turn in the opposite direction this morning.
