Outlook: The energy complex is lower to start the morning with reports that the US has lifted oil sanctions on Venezuela. The deal looks to be a 6-month term which will allow them to resume crude oil exports. Early estimates are that the country could provide 200,000 bpd to the market immediately while further increases will require time and investments. The estimate may be underwhelming to the trade limiting downside considering spare capacity is estimated near 1 million bpd. Any significant downside moves in the oil market could prompt OPEC to take further action which may establish a natural floor price. The conflict in the Middle East and macroeconomic tightening will continue to act in opposition and create volatile price swings. Unplanned outages will remain the greatest upside risk if conflicts expand outside of Gaza.
Crude
- The US has lifted oil sanctions against Venezuela for 6-months.
- Analysts estimates show that Venezuela can add 200,000 bpd of oil output immediately.
- Chinese refinery runs rose by 2.19 mbpd to 16.54 mbpd in August, according to JODI.
- The EIA reported crude stocks fell by 4.4 million barrels last week.
- US crude stocks sit 21.2 million barrels below 5-year average levels.
- Fed Chair Jerome Powell will speak today at 11:00 am 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
- China’s September diesel output was up 9% y/y, according to their stats bureau.
- The EIA reported diesel stocks fell by 3.1 million barrels last week.
- US diesel demand rose 20% w/w to 4.4 mbpd.
Gasoline
- China’s September gasoline output was up 17.5% y/y, according to their stats bureau.
- The EIA reported gasoline stocks fell by 2.3 million barrels last week.
- US gasoline demand rose 4% w/w to 8.9 mbpd.
Propane
- Conway is trading at .6800 while Belvieu is trading at .7000.
- Conway Swap Oct24-Mar25 trading ~.7725.
- Spot Conway is trading at 33% of WTI.
- The US is exporting 43% of production as of 10/13/23.
- The EIA reported propane stocks rose by 806,000 barrels last week.
Natural Gas
- Overnight weather runs removed 2 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.
- The EIA will report inventories at 9:30 am CT.
Continuous Daily RBOB: RBOB futures are nearly 20 cents off their lows set in early October. Prices at the pump have been slowly declining throughout the country.
