Outlook: Another day has passed with no expansion of the conflict in the Middle East which may be allowing more risk premium to leave the marketplace. Saudi Arabia made a comment yesterday that they are working to keep any escalation from expanding outside of Gaza. The US may also be making progress with some level of sanction relief with Venezuela which could provide additional crude supply to the market. The volumes of the potential deal remain unknown. Macro woes have already resurfaced today with the release of the US Producer Price Index data, which beat estimates across the board. The positive economic data could indicate the Fed may need to take more measures to keep inflation trending in the right direction. US CPI data for September will be reported tomorrow with inflationary declines expected for both m/m and y/y prints.
Crude
- The US and Venezuela are nearing an agreement that would lift some oil and banking sanctions.
- Saudi Arabia said yesterday that it is working with regional and international partners to prevent escalation of the situation in Gaza.
- US Treasury Secretary Janet Yellen said today that she still expects the US economy to experience a soft landing.
- The chance of a tropical disturbance in the Gulf mentioned yesterday has fizzled out.
- European oil inventories rose 4.1% w/w.
- Reuters estimates crude stocks rose by 1.3 million barrels last week.
- The API will report its inventory survey this afternoon at 3:30 CT.
- The Fed minutes will be released at 1:00 pm CT.
- As of 8:15 am CST: Brent crude oil down $0.84 to $86.83, US dollar index down $0.123 to 105.702 while the nearby e-mini S&P 500 futures contract is up 10.25 to 4402.00.
Diesel
- Reuters estimates diesel stocks fell by 1.4 million barrels last week.
- US diesel exports to Europe have risen to their highest level since 2019 at 286,000 bpd.
- European diesel stocks rose 0.5% in September to 391 million barrels.
Gasoline
- Reuters estimates gasoline stocks fell by 1.9 million barrels last week.
- European gasoline stocks rose 1.9% in September to 106 million barrels.
Propane
- Conway is trading at .6625 while Belvieu is trading at .6875.
- Conway is trading at 33% of WTI.
- The US is exporting 75% of production as of 9/29/23.
Natural Gas
- Overnight weather runs removed 3 HDDs through the two-week forecast.
- Chevron’s Australian LNG Union will resume strikes next week.
- November natural gas is trading near 15-month highs.
- Reuters estimates nat gas inventories rose between 77-93 Bcf last week.
Nymex 321 Crack: Crack spreads have been under heavy pressure over the last few months. Declining RIN prices may be one element providing headwinds; however, a heavy Q4 maintenance season should provide support.
