Outlook: A quiet start to the week for energies that are trading lower to kick things off. Headlines are very quiet today and very few fresh market drivers are providing influence. The weekend came and went without the anticipated ground invasion of Gaza. Diplomatic efforts and a lack of escalation may be pulling some risk premium out of the market. The situation remains volatile and is subject to change very quickly. The only fundamental shift over the weekend was reports that global crude in floating storage saw significant declines last week. The global market remains very tight with very little sign of new supply sources developing. Macroeconomic drivers are few and far between to start the week but we will see Powell speak on Wednesday and the inflation-indicating PCE report Friday.
- The Israel & Hamas war continued in Gaza over the weekend but did not spread into new territory.
- Diplomatic efforts to prevent the war from spreading continued over the weekend continued over the weekend which may provide the market with some level of comfort.
- Global crude in floating storage is expected to have fallen by over 10% last week.
- Money mangers lifted bullish bets on Brent crude last week to its highest level since 2016.
- Call options trading on Brent crude had its busiest week ever last week.
- Baker Hughes reported US oil rigs rose by 1 last week to 502.
- As of 8:19 am CST: Brent crude oil down $0.63 to $91.53, US dollar index down $0.077 to 106.088 while the nearby e-mini S&P 500 futures contract is down 19.25 to 4228.00.
- Group 3 diesel basis remains sharply higher trading near $1.00 over NYMEX futures.
- Last week’s COT report showed HO managed money traders net bought 4,204 contracts and are net long 36,649.
- Last week’s COT report showed RBOB managed money traders net sold 7,057 contracts and are net long 25,964.
- Conway is trading at .6650 while Belvieu is trading at .6750.
- Conway Swap Oct24-Mar25 trading ~.7625.
- Spot Conway is trading at 33% of WTI.
- The US is exporting 43% of production as of 10/13/23.
- Overnight weather runs removed 2 HDDs through the two-week forecast.
- Baker Hughes reported nat gas rigs rose by 1 to 118 last week.
- Both the US and Europe are sitting on healthy natural gas inventories ahead of the heating season.
Diesel Forward Curve: The forward curve remains backwardated but lower than last year. High basis levels in some regions are making up for differences seen relative to year-ago prices. Healthy discounts can be seen for buyers looking into next year.