Outlook: Energies are starting today mixed with crude and gasoline higher and diesel lower. The market broadly tipped oversold yesterday which may be providing a pop today. Technicals for diesel are likely being overcome by fundamental pressure with reports that Russia will completely lift their oil product export ban next week. A slow start to the heating season could make it difficult for diesel to find firm footing short-term. Crude should manage to find support over the next few weeks with reports of record tankers heading for the Gulf to grab US oil. The US remains the largest buyer looming with the SPR still at historic lows despite the smaller purchases that have been made this year. They have yet to swing big and it seems likely they’ll keep layering in smaller quantities to avoid pressuring prices.
Crude
- The US fired upon a weapons depot in Syria used by Iran’s Islamic Revolutionary Guard Corps yesterday, per Defense Secretary Lloyd Austin.
- WTI closed below its lower Bollinger Band yesterday.
- Crude’s prompt spread fell to 0 yesterday after peaking $2.60 at the end of September.
- China’s CPI for October was reported at -0.2% vs -0.1% est.
- Fed Chair Jerome Powell will speak again today at 1:00 pm CT.
- Reuters estimates crude stocks fell by 300,000 barrels last week.
- The API survey showed crude stocks rose by 11.9 million barrels last week.
- As of 8:30 am CST: Brent crude oil up $1.00 to $80.41, US dollar index down $0.075 to 105.518 while the nearby e-mini S&P 500 futures contract is up 10.25 to 4410.00.
Diesel
- According to three producer sources, Russia’s diesel and gasoline export ban is expected to be fully lifted next week.
- Nearby diesel closed below its 200-day moving average yesterday for the first time since July 26th.
- Reuters estimates diesel stock fell by 1.5 million barrels last week.
- The API survey showed diesel stocks rose by 980,000 barrels last week.
Gasoline
- The prompt gasoline crack has risen to its highest level since September, trading back above $14.
- Reuters estimates gasoline stocks fell by 800,000 barrels last week.
- The API survey showed gasoline stocks fell by 360,000 barrels last week.
Propane
- Conway is trading at .5975 while Belvieu is trading at .6175.
- Conway Swap Oct24-Mar25 trading ~.7050.
- Spot Conway is trading at 34% of WTI.
- The US is exporting 74% of production as of 10/27/23.
- 2024-2025 values have fallen to favorable price points and should be worth considering.
Natural Gas
- Overnight weather runs removed 1 HDDs through the two-week forecast.
- The end of November is forecast to be warmer than the 10-year average.
- Total gas storage is 5.7% above 5-year average levels.
- The EIA increased their 023 US natural gas consumption forecast to 98.4 Bcf/d vs 89.2 Bcf/d previous and decreased their gas production forecast to 103.68 Bcf/d from 103.70 Bcf/d previous.
Continuous Prompt WTI Spread: The backwardation in the crude market has tumbled with the selloff this week. The prompt spread traded to a high of $2.60 in September and traded to a low of 0 yesterday.
