Outlook: The headwinds remain strong for energies today with crude and refined products all taking on losses. The weakness feels like it's driven by a macroeconomic sentiment shift, although equities for the moment, are observing small gains. Employment data has been mixed this week with JOLTS Jobs exceeding expectations while ADP Employment underperformed this morning. US services PMI will be reported this morning with expansion expected. Higher for longer interest rate expectations and the risk of government shutdown will likely continue to limit upside moves in the energy complex. Fundamentals could come into play this morning with the EIA reporting stocks at 9:30 am CT. The API survey yesterday afternoon showed a significant draw in crude while product stocks were seen rising. Cushing crude stocks remain on the verge of operational minimums and another decline could heighten concerns.
Crude
- Higher for longer rate expectations are providing macroeconomic headwinds for energy this week.
- OPEC+ JMMC did not recommend any changes to the current output policy.
- OPEC’s data suggests current cuts will lower inventories by 3 mbpd in Q4 this year, according to Bloomberg.
- Russia reiterated its commitment to reduce crude exports by 300,000 bpd through December.
- China is on Golden Week holiday this week.
- Reuters estimates crude stocks fell by 500,000 barrels last week.
- The API survey showed crude stocks fell by 4.2 million barrels last week.
- As of 8:13 am CST: Brent crude oil down $1.73 to $89.19, US dollar index down $0.405 to 106.595 while the nearby e-mini S&P 500 futures contract is up 8.25 to 4273.00.
Diesel
- Reuters poll estimates diesel stocks fell by 300,000 barrels last week.
- The API survey showed diesel stocks rose by 400,000 barrels last week.
- Diesel closed above its 50-day MA yesterday but is extending below it with fresh lows this morning. Expect $3.00 for next support.
Gasoline
- Reuters poll estimates gasoline stocks rose by 200,000 barrels last week.
- The API survey showed gasoline stocks rose by 4 million barrels last week.
- Russian gas and diesel prices are rising again after Russia considers easing product export ban.
Propane
- Conway is trading at .6975 while Belvieu is trading at .7250.
- Conway is trading at 33% of WTI.
- The US is exporting 78% of production as of 9/22/23.
- OPIS expects propane stocks rose 1.8 million barrels last week.
Natural Gas
- Weekend weather runs added 7 HDDs through the two-week forecast.
- US power burn hit an all-time high for fall of just over 37 Bcf/d over the last two weeks.
- Prompt NG is trading above $3.00 for the first time since early August.
Continuous Daily HO: Diesel is testing its 50-day moving average in a more convincing fashion this morning. A close below this level paves the way for a return to $3.00.
