Outlook: Energies are starting the morning higher with crude and products up across the board. After rejecting sub $90 levels yesterday, crude is leading the complex higher today up nearly 2%. As we’ve been saying, fundamental tightness looks to be acting as a floor preventing significant downside breakouts. Reports that crude stocks at Cushing are nearing operation lows is a good reminder of how tight stocks are. When Cushing stocks fall below 20% at the 98 million barrel facility, the product becomes too difficult to extract and the quality drops significantly. The Nov-Dec crude spread has expanded sharply as inventories at the delivery point have fallen. The EIA inventory report should give us further insight on how the stocks sit after last week at 9:30 CT today.
Crude
- Crude stocks at the delivery point in Cushing are at risk of following below minimum operating levels.
- The prompt crude spread is expanding today with fresh highs at $1.99.
- The US SPR rose by 300,000 barrels last week.
- Reuters estimates crude stocks fell by 300,000 barrels last week.
- The API survey showed crude stocks rose by 1.6 million barrels last week.
- The US dollar in approaching yearly highs trending positive to start the week.
- As of 8:41 am CST: Brent crude oil up $1.59 to $95.55, US dollar index up $0.232 to 106.465 while the nearby e-mini S&P 500 futures contract is up 8.25 to 4323.00.
Diesel
- New York shipped out three diesel cargoes over the past week, averaging 41,000 bpd of exports, the highest monthly rate since 2020.
- Reuters estimates diesel stocks fell by 1.3 million barrels last week.
- The API survey showed diesel stocks fell by 1.7 million barrels last week.
Gasoline
- Reuters estimates gasoline stocks fell by 100,000 barrels last week.
- The API survey showed gasoline stocks fell by 100,000 barrels last week.
Propane
- Conway is trading at .6750 while Belvieu is trading at .7125.
- Conway is trading at 32% of WTI.
- The US is exporting 47% of production as of 9/15/23.
- OPIS estimates propane stocks rose by 2.1 million barrels last week.
Natural Gas
- The CME will be launching micro Henry Hub futures and options on November 6th. Contracts will be 1/10th of the size of the standard contract and will be cash-settled.
- Weekend weather added 7 CDDs through the two-week forecast.
- Reuters poll estimates a natural gas injection between 80-92 Bcf for last week.
Continuous Daily CL: Prompt crude once again rejected sub $90 yesterday and is rebounding sharply today. The market recently tested the Nov22 high and may look to revisit this level is the EIA supports the fundamental tightening trend today.
