Outlook: The weekend came and went without any major escalations in the Middle East, however, the risk premium put in last week looks to be holding steady this morning. The oil call skew rose to its highest level since Russia’s invasion of Ukraine showing the sensitivity at hand when the Middle East sees conflict. As it sits today, there are still no observed supply disruptions for oil. Global fundamental tightness remains the underlying theme, especially in the diesel complex, which has led the market higher over the last week. Russia has lifted the majority of its diesel export ban but the situation remains variable with the heating season upon us. China’s refinery activity has fallen to a two-month low and additional export quotas are expected to be lighter near-term. Look for the market to find more definition throughout the week after the idle open today.
Crude
- Markets opened steady last night with no resolutions or escalations in the Israeli/Hamas conflict.
- The oil call skew is at its strongest level since Russia invaded Ukraine.
- Saudi Arabia’s crude exports fell by 428,000 bpd in August to a 28-month low of 5.58 mbpd, according to JODI data.
- Chinese refinery activity has fallen to its lowest level in two months, according to trade data.
- Continuous Daily WTI closed above its 50-day moving average on Friday.
- Last week’s COT report showed crude oil-managed money traders decreased net length by 117,000 contracts.
- Baker Hughes reported oil rigs rose by 4 last week to 501.
- As of 8:24 am CST: Brent crude oil down $0.04 to $90.85, US dollar index down $0.268 to 106.371 while the nearby e-mini S&P 500 futures contract is up 23.25 to 4380.00.
Diesel
- Continuous Daily HO closed above its 50-day moving average on Friday.
- Group 3 diesel basis also jumped last week to accompany the move in futures, pushing cash values sharply higher.
- Last week’s COT report showed HO-managed money traders net sold 7,222 contracts and are net long 32,445 contracts.
Gasoline
- Last week’s COT report showed RBOB-managed money traders net sold 15,415 contracts and are net long 33,021 contracts.
Propane
- Conway is trading at .6800 while Belvieu is trading at .7025.
- Conway Swap Oct24-Mar25 trading ~.7525.
- Spot Conway is trading at 34% of WTI.
- The US is exporting 81% of production as of 10/6/23.
Natural Gas
- Overnight weather runs removed 7 HDDs through the two-week forecast.
- US LNG exports hit 3.1 million metric tons in the first half of October, behind pace to reach the 7.3 million tons exported in September.
- Baker Hughes reported nat gas rigs fell by 1 to 117 last week.
Iranian Oil Exports: Iranian oil exports continue to climb as the US mulls additional sanctions…
