Outlook: Energies are mixed to start today’s session with crude and gas higher and diesel slides lower. Rhetoric from the Middle East leaned bullish overnight with Iran calling for an Israel oil embargo. OPEC+ responded saying they have no intentions of moving forward with such a plan under the current circumstances. Adding to the bullish narrative were overnight reports that China’s GDP and retail sales exceeded expectations. China has ample room for demand growth and any acceleration could put pressure on energies. Economic concerns have also slipped recently with a recent WSJ survey showing declining probabilities for a recession in the US. The energy complex feels well supported but details of Venezuelan oil sanction relief still await.
Crude
- Oil refiners in China hit record daily refining rates in September, processing 15.5 mbpd, up 12% y/y, according to Bloomberg.
- Reuters estimates Russia’s offline primary oil refining capacity for October will rise 14% from previous estimates.
- The consensus probability of a recession over the next 12 months fell from 54% to 48% in the latest WSJ survey.
- China’s Q3 GDP and September retail sales beat expectations, suggesting positive growth over Q2.
- Reuters estimates crude stocks fell by 300,000 barrels last week.
- The API survey showed crude stocks fell by 4.4 million barrels last week.
- The EIA will report inventories at 9:30 CT.
- As of 8:19 am CST: Brent crude oil up $0.86 to $90.76, US dollar index up $0.084 to 106.334 while the nearby e-mini S&P 500 futures contract is down 19.25 to 4382.00.
Diesel
- Reuters estimates diesel stocks fell by 1.4 million barrels last week.
- The API survey showed diesel stocks fell by 600,000 barrels last week.
Gasoline
- Reuters estimates gasoline stocks fell by 1.1 million barrels last week.
- The API survey showed gasoline stocks fell by 1.6 million barrels last week.
Propane
- Conway is trading at .6800 while Belvieu is trading at .7000.
- Conway Swap Oct24-Mar25 trading ~.7625.
- Spot Conway is trading at 33% of WTI.
- The US is exporting 81% of production as of 10/6/23.
- OPIS estimates propane stocks rose by 260,000 barrels last week.
Natural Gas
- Overnight weather runs added 3 HDDs through the two-week forecast.
- LNG labor unions in Australia call off strikes after accepting Chevron’s settlement.
- Reuters estimates nat gas stocks rose between 76-84 Bcf last week.
Prompt WTI Spread: The nearby crude spread is under pressure this morning down over 20 cents. Look for a potential reversal here if the EIA shows a larger-than-expected draw in Cushing stocks, which are dangerously close to operation minimums.
