Outlook: Energies are higher across the board today with the exception of natural gas which has trended lower all week. Natural gas inventories remain in a healthy state and a larger than expected build in stocks last week supported further weakness. The rest of the complex is likely seeing another wave of risk-on ahead of the weekend. With growing expectations for Israel to begin its ground invasion, the risk of the conflict spreading beyond Gaza grows. Also supporting prices is the US stepping in to purchase more barrels to refill the SPR. The purchase of barrels at much higher levels than initially stated could hint toward concerns of higher prices while the reserve remains low. The US said they will continue to solicit offers following this purchase which ends in January. Crude may find additional momentum if it manages to settle above $90 today.
Crude
- Yesterday, the US announced plans to buy around 6 million barrels of sour crude for the SPR in December and January.
- Israel is expected to launch a ground invasion into Gaza, raising concerns that the conflict may spread in the Middle East.
- An American destroyer intercepted a missile fired by the Houthi rebels in Yemen yesterday.
- China has said they are still considering oil purchases for their strategic reserve.
- Venezuelan oil output is expected to see a gradual decline with sanctions being lifted.
- Baker Hughes will report rig counts at 12:00 CT.
- As of 8:13 am CST: Brent crude oil up $0.97 to $93.34, US dollar index down $0.056 to 106.197 while the nearby e-mini S&P 500 futures contract is down 13.25 to 4290.00.
Diesel
- China’s refined fuel exports are expected to decline by 40% next month.
- The Chinese government has told refiners not to expect further export quotas in 2023, per Bloomberg.
- AAA reports the national average retail diesel price at $4.475, down a half cent from last week.
Gasoline
- China’s traffic congestion has risen 14.1% this week.
- AAA reports the national average retail gas price at $3.558, down 7 cents from last week.
Propane
- Conway is trading at .6850 while Belvieu is trading at .6950.
- Conway Swap Oct24-Mar25 trading ~.7700.
- Spot Conway is trading at 33% of WTI.
- The US is exporting 43% of production as of 10/13/23.
Natural Gas
- Overnight weather runs removed 4 HDDs through the two-week forecast.
- The EIA reported natural gas stocks rose by 97 Bcf last week.
- Working gas inventories remain 175 Bcf above 5-year average levels.
- Prompt nat gas is down over 25 cents on the week.
Continuous Daily HO: The prompt diesel contract will look to close above its 50-day moving average today after several rejections earlier this week. A close above could signal further upside into next week.
