Outlook: The energy complex is being bid up once again on a Friday, in a similar move to what we saw last week. Risk-on sentiment is again likely to be the key driver as the US retaliated against the Iranian-backed militia in Syria that hit US troops yesterday. Iran has said the US will not be spared if the conflict in the Middle East spills outside the current borders, reflecting rising tensions. Traders may be looking to seek protection against this escalation by positioning themselves long ahead of the weekend. Last week the buying fizzled out mid-morning and we saw a pullback and we could see a similar event today. On the macro front, the PCE data came in as expected and didn’t appear to have much of an effect on the energy side today.
Crude
- The US struck a Syrian weapons facility today in retaliation for the attack on US forces yesterday.
- Israel has begun to ramp up its ground offensive.
- Venezuela may divert 250,000 bpd of crude to the US and away from Asia, according to Bloomberg.
- Chevron sees its Venezuelan oil production 15% to 150,000 bpd by year-end.
- Risk-on sentiment is likely the key bullish driver today as traders look to be positioned long to protect against escalation in the ME.
- September PCE and Core PCE fell in line with estimates at 3.4% and 3.7% respectively.
- Baker Hughes will report its rig counts at 12:00 CT.
- As of 8:00 am CST: Brent crude oil down $1.39 to $89.32, US dollar index up $0.035 to 106.635 while the nearby e-mini S&P 500 futures contract is up 17.25 to 4173.00.
Diesel
- Gasoil stocks at Europe’s ARA hub fell by 6% w/w.
- Singapore middle distillate stocks rose 4% w/w.
- Germany’s diesel sales fell 16% y/y in August.
Gasoline
- Gasoline stocks at Europe’s ARA hub rose by 3% w/w.
- Singapore light distillates fell 15% w/w.
- AAA reports the national average gas price at $3.51, down 4 cents from last week.
Propane
- Conway is trading at .6350 while Belvieu is trading at .6450.
- Conway Swap Oct24-Mar25 trading ~.7325.
- Spot Conway is trading at 33% of WTI.
- The US is exporting 71% of production as of 10/20/23.
Natural Gas
- Overnight weather runs added 4 HDDs through the two-week forecast.
- The EIA reported nat gas stocks rose 74 Bcf last week.
- Total gas storage is 5.2% above 5-year average levels.
- Nymex nat gas is up over 40 cents this week.
Continuous Hourly WTI: Even with a rally today, prompt WTI is on track to close lower for the week. Volatile swings with an overall bearish trend was the theme for the week.
