Outlook: Energies are off to another slow start today with crude and gas trading near even while diesel is down over 4 cents. The market continues to assess the risks of any developments between Israel and Hamas. President Biden is scheduled to be in Israel tomorrow to voice support and promote de-escalation. There remains no disruption to oil flows as it stands today. Traders may also be waiting for additional details regarding the deal between the US and Venezuela. Relief of oil-related sanctions from the US could be a longer-term bearish consideration. On the macro front, US retail sales came in higher than expected for September at 0.7% vs 0.3% est. The economy continues to show signs of resilience under the high-interest rate environment.
Crude
- Russian seaborne crude exports on a 4-week average rose to 3.36 mbpd through the first half of the month.
- The US and Venezuela have resumed talks that could lead to a release of US oil sanctions.
- Saudi Aramco’s CEO said they could raise crude production within weeks if demand calls for such action.
- President Biden will make a trip to Israel on Wednesday.
- Bloomberg data shows freight rates on 16 different trade routes increased by an average 50% this week due to the conflict in the Middle East.
- Reuters estimates crude stocks fell by 1.3 million barrels last week.
- The API will report its inventory survey at 3:30 pm CT.
- As of 8:15 am CST: Brent crude oil down $0.07 to $89.58, US dollar index up $0.258 to 106.502 while the nearby e-mini S&P 500 futures contract is down 25.25 to 4375.00.
Diesel
- Reuters estimates diesel stocks fell by 1.7 million barrels last week.
- Russian diesel exports fell 20% in the first half of October.
Gasoline
- Reuters estimates gasoline stocks fell by 1.6 million barrels last week.
- Gasoline cracks have fallen to their lowest levels since 2020.
Propane
- Conway is trading at .6800 while Belvieu is trading at .7000.
- Conway Swap Oct24-Mar25 trading ~.7575.
- Spot Conway is trading at 33% of WTI.
- The US is exporting 81% of production as of 10/6/23.
- The USDA Crop Progress showed US corn harvest as 45% complete.
Natural Gas
- Overnight weather runs added 2.5 HDDs through the two-week forecast.
- The EIA’s DPR report for October forecast US gas production will decrease by 451 mmcf/d between October and November.
- Reuters estimates nat gas stocks rose between 76-84 Bcf last week.
US Shale: After US production hit record levels last week, the shale region is expected to see declines through the end of the year. Shale production is expected to fall to 9.6 mbpd by the end of November.
