Outlook: Despite a strong fade into the close yesterday, energies are tracking in positive territory this morning. Overall, fears of the conflict in the Middle East impacting oil production have faded and concerns of worsening demand destruction have taken its place. Hawkish comments from Fed officials, including Jerome Powell, have the market concerned of stronger headwinds as it relates to energy demand. Macroeconomic reports will continue to be a key market driver moving forward. Another event to keep an eye on is the US debt deadline on November 17th, which numerous officials have warned poses a major threat to the US. Look for the energy complex to remain vulnerable to large price swings with a quickly shifting economic and fundamental environment.
Crude
- The energy complex is on track for a weekly loss despite the small rebound today.
- The strength this morning may be a technical bounce with markets trying to climb out of oversold territory.
- Jerome Powell said yesterday that the Fed is not confident they have done enough to slow inflation back to target levels.
- The prompt crude spread closed in Contango yesterday for the first time since July.
- The API survey showed crude stocks rose by 11.9 million barrels last week.
- Michigan Consumer Sentiment will be reported at 10:00am CT.
- Baker Hughes will report its rig count at 12:00 pm CT.
- As of 9:04 am CST: Brent crude oil up $1.30 to $81.31, US dollar index up $0.003 to 105.913 while the nearby e-mini S&P 500 futures contract is up 13.25 to 4375.00.
Diesel
- Gasoil stocks are Europe’s ARA hub fell 2.7% over the last week.
- Singapore middle distillate stocks rose 5.4% over the last week which was a 2-year high at 9.948 million barrels.
Gasoline
- Gasoline stocks at Europe’s ARA hub fell 7.7% over the last week.
- Singapore light distillate stocks fell 1% over the last week.
- GasBuddy data shows US gasoline demand was down 9% from last Wednesday.
Propane
- Conway is trading at .6075 while Belvieu is trading at .6225.
- Conway Swap Oct24-Mar25 trading ~.7050.
- Spot Conway is trading at 33% of WTI.
- The US is exporting 74% of production as of 10/27/23.
Natural Gas
- Overnight weather runs added 1 HDDs through the two-week forecast.
- The beginning of November is forecast to be warmer than the 10-year average.
- Total gas storage is 5.7% above 5-year average levels.
- The European Parliament urged the bloc to enact a full ban for Russian LNG per Europa.
- The EIA reported yesterday that the US is developing over 20 Bcf/d of natural gas pipeline to deliver supply to 5 LNG export terminals through early 2025.
Continuous Daily NG: Prompt natural gas futures have found support at the 50-day moving average after following the rest of the energy complex lower this week. Warmer weather has decreased demand expectations, but extended forecasts are beginning to show colder weather patterns developing.
