Outlook: Energies are finding strength today as the focus remains on the tightening supply environment. October WTI is set to expire tomorrow and the backwardation in the prompt spread continues to expand. After builds across the board last week, Reuters is estimating draws will return for crude and products this go-around. The API will release its survey this afternoon at 3:30 CT to give us further insight before the EIA reports data tomorrow morning. The global market is seeing a lot of fresh import/export data from major producing and consuming countries this week. India and China remain on pace for strong crude imports this year while Russia makes progress on introducing an export duty on oil products. On the macro front, the PBoC is first on the docket for an interest rate decision tonight. Expectations are for rates to remain unchanged, but a surprise cut could add bullish momentum.
Crude
- Russian crude shipments average 3.334 mbpd in the most recent 4-week period
- China’s July crude imports fell to a 6-month low at 10.32 mbpd, according to JODI.
- The EIA released its Drilling Productivity report yesterday which showed expectations for US shale oil production to fall 40kbpd to 9.39 mbpd in October.
- Saudi Aramco’s CEO lowered the long-term demand outlook from 125 mbpd to 110 mbpd for 2030.
- October WTI will expire 9/20 and there is around 85 cents of backwardation to the November contract.
- The FOMC will announce its interest rate decision on Wednesday. Expectations are for rates to remain unchanged.
- Reuters estimates crude stocks fell by 2.7 million barrels last week.
- As of 8:43 am CST: Brent crude oil up $0.96 to $95.38, US dollar index down $0.227 to 104.975 while the nearby e-mini S&P 500 futures contract is down 10.25 to 4491.00.
Diesel
- Russian diesel exports through the first half of September are down 31% compared to August.
- Chicago Diesel basis fell another 2.5 cents yesterday to -50.50c
- Reuters estimates diesel stocks fell 700,000 barrels last week.
Gasoline
- US imports of European gasoline fell 64% w/w to 88kbpd last week which is a 5-month low.
- Group 3 gasoline basis fell 9.25c yesterday to -4.25c. Group 3 traded at +77 cents on 9/7.
- Reuters estimates gasoline stocks fell by 500,000 barrels last week.
Propane
- Conway is trading at .7675 while Belvieu is trading at .77.
- Conway is trading at 3% of WTI.
- The US is exporting 65% of production as of 9/8/23.
Natural Gas
- Overnight weather runs added 3 CDDs through the two-week forecast.
- The EIA DPR report for September forecast US gas production will decrease by 339 mmcf/d between Sep and Oct.
Continuous Daily WTI: Prompt crude is testing the Nov22 high this morning at $93.74, which is also the high for the day.
