Outlook: The energy complex looks to be trending higher to end the week with crude up over a dollar and products positive heading toward expiration. November WTI has been setting new contract highs this week as prices look to settle in above $90. A tight fundamental complex is the theme that continues to support prices with a lack of bearish drivers developing. A government shutdown is looking like the next bump in the road and is largely seen as negative for energy. Whether it will have a nominal impact in this volatile environment remains to be seen but a broad selloff would likely pull energies with. The US dollar is moving sharply lower for the second consecutive session following the breakout move higher this week. Equities are responding higher and will look to battle back to even for the week.
Crude
- The Biden administration’s 5-year plan for offshore oil and gas leasing will not include any sales in 2024 and will represent the lowest number of auctions in the history of the program.
- A Reuters poll expects WTI crude to average $79.64 in 2023 and $82.99 in 2024.
- Crude throughput at Chinese refineries hit a new record in September at 9.3 mbpd.
- Chinese demand is expected to see a boost with their Golden Week holiday starting today.
- US oil refiners weekly capacity is seen down 309,000 bpd this week, according to IIR.
- US Core PCE rose 3.9% y/y in August vs 3.9% est.
- Michigan Consumer Sentiment will be reported at 9:00 am CT.
- China’s NBS manufacturing data will be reported tonight after trading hours.
- As of 8:00 am CST: Brent crude oil up $0.67 to $96.05, US dollar index down $0.450 to 105.773 while the nearby e-mini S&P 500 futures contract is up 31.25 to 4368.00.
Diesel
- Today is last trade day for October HO.
- The diesel prompt spread is backwardated ~5 cents heading into expiration.
- Russia may introduce quotas on overseas fuel exports if the export ban introduced last week does not succeed.
Gasoline
- Today is last trade day for October RBOB.
- The gas prompt spread is backwardated ~4 cents heading into expiration.
- Continuous RBOB closed below its 200-day moving average yesterday.
Propane
- Conway is trading at .6875 while Belvieu is trading at .7200.
- Conway is trading at 32% of WTI.
- The US is exporting 78% of production as of 9/15/23.
- The EIA reported propane stocks rose by 730,000 barrels last week.
- Propane exports jumped 812,000 bpd (66%) to 2.041 mbpd 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 HDDs through the two-week forecast.
- The EIA reported natural gas inventories rose by 90 Bcf for last week.
Continuous Daily NG: With the expiration of the October contract, the prompt nat gas contract rolled above its 200-day moving average. Look for $3.00 to act as resistance and the 200-day to act as support short term.
