Outlook: The energy complex is mixed to start the week with a slew of economic and fundamental reports due starting tomorrow. Diesel and natural gas are leading energies higher, and the strength may be attributed to a healthy increase in HDDs in the back end of the forecast. A warm start to the heating season has kept heating demand forecasts suppressed thus far. Crude is observing small gains and didn’t see much reaction to the OPEC monthly report this morning. OPEC saw production up but also saw a small increase in their 2023 demand forecast which was offsetting. The IEA will release its monthly report tomorrow, followed by EIA data on Wednesday. Inflation data for the US will be reported tomorrow morning to kick things off on the Macro side. Core CPI, which is the Fed’s primary target, is expected to remain flat at 4.1%. The headline yearly number is expected to decline from 3.7% to 3.3%.
Crude
- OPEC said its oil output rose by 80,000 bpd to 27.9 mbpd in October.
- OPEC left its 2024 world oil demand forecast unchanged but increased its 2023 forecast by 20,000 bpd to 2.46 mbpd.
- OPEC says the recent drop in oil prices is mainly due to speculators.
- Iraq is making a push to resume oil flows at its 500kbpd pipeline through Turkey, which has been shut down for seven months.
- Global crude in floating storage fell 26% last week.
- Baker Hughes reported US oil rigs fell by 2 last week to 494.
- US October CPI will be reported tomorrow at 7:30 am CT. Y/y inflation is expected to fall from 3.7% to 3.3%
- As of 8:36 am CST: Brent crude oil up $0.10 to $81.23, US dollar index up $0.037 to 105.898 while the nearby e-mini S&P 500 futures contract is down 19.25 to 4411.00.
Diesel
- Diesel futures may find resistance at the 200-day moving average this week near $2.7922
- Colder weather developing in the back end of the forecast should be supportive for heating oil demand, primarily on the east coast.
Gasoline
- GasBuddy models show US gasoline demand fell 4% to 8.42 mbpd last week.
- RBOB-cracks have fallen back below $15 to start the week.
Propane
- Conway is trading at .6125 while Belvieu is trading at .6275.
- 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 11.5 HDDs through the two-week forecast.
- Total gas storage is 5.7% above 5-year average levels.
- China is now the world’s second largest LNG re-exporter after Spain.
- Baker Hughes reported US nat gas rigs were unchanged at 118 last week.
Continuous Daily HO: Diesel futures are testing the 200-day moving average resistance today. A close above could provide further support.
