Outlook: The energy complex is mixed this morning as momentum comes to s standstill. The market was presented with fresh bearish drivers this morning which included reports of bearish economic data out of the Eurozone and an increase in Russian oil exports. The BoE has another interest rate decision next week while Europe is reflecting the risk of a Recession with business activity underperforming. The global oil market remains tight, however, Russian exports climbing and Venezuelans back in the market may be providing some level of comfort. Both Saudi Arabia and Russia are participating in voluntary production cuts that are scheduled to conclude by the end of the year unless an extension is announced. A sharp decline in prices could provoke further action from OPEC+ and will likely protect against a drastic move lower. On the flip side, OPEC+ has ample spare capacity and could unwind cuts if unrest in the Middle East drives prices higher.
- Hamas may release up to 50 prisoners in exchange for humanitarian efforts in the Gaza strip while President Biden said a ceasefire could be negotiated if hostages are released.
- Russia’s seaborne crude exports hit a four-month higher at 3.5 mbpd over the last week.
- The IEA released its World Energy Outlook which forecasts demand for coal, oil, and natural gas will peak by 2030.
- Eurozone business activity came in mostly worse than expected, contracting under the high-interest rate environment.
- Reuters estimates crude stocks rose by 1.6 million barrels last week.
- The API will report its inventory survey at 3:30 CT.
- As of 7:35 am CST: Brent crude oil up $0.09 to $89.92, US dollar index up $0.392 to 105.928 while the nearby e-mini S&P 500 futures contract is up 25.25 to 4266.00.
- Group 3 diesel basis fell over 90 cents yesterday to around 9 cents.
- Reuters estimates diesel stocks fell 1.6 million barrels last week.
- French road fuel sales fell 13% y/y in September.
- Reuters estimates gasoline stocks fell 1.7 million barrels last week.
- Conway is trading at .6425 while Belvieu is trading at .6575.
- Conway Swap Oct24-Mar25 trading ~.7475.
- Spot Conway is trading at 33% of WTI.
- The US is exporting 43% of production as of 10/13/23.
- Overnight weather runs added 4 HDDs through the two-week forecast.
- European weather is expected to see above average temperatures into early November.
- Reuters estimates US natural gas stocks rose around 80 Bcf last week.
Venezuelan Crude: Many US refiners are set up to handle heavier crude grades which is the category Venezuelan crude falls into. Heavier crudes such as WCS typically trade at a discount to lighter blends and can be favorable for margins. The thirst for this crude will likely drive US imports of the Black Gold blend as fast as Venezuela can keep up.