Outlook: Energies are lower across the board this morning with diesel being the most resistant to the move. Crude may be seeing a continuation of yesterday following the EIA data which showed significant increases in crude stocks over the last week. Products, however, went the opposite way showing healthy draws. Diesel remains the tightest as it heads into heating season which should continue to provide support. Broader bearish macroeconomic sentiment may still be providing headwinds despite some positive economic data this week. Demand destruction hasn’t shown up necessarily in the weekly stats, but fear of a worsening situation is enough to create downward pressure. China is where the global market is looking for significant demand growth and that has yet to be seen on a consistent basis. OPEC will likely maintain production cuts until the forecasted fundamental tightness comes to fruition.
Crude
- The Biden Administration announced that the US will enforce oil sanctions against Iran and they expect to see the 1 mbpd of exports decline.
- Saudi Arabia is expected to continue their 1 million bpd production cut into 2024, according to a Bloomberg survey.
- China’s refinery throughput fell to 15.05 mbpd in October, down from 15.48 mbpd in September, according to NBS data.
- The EIA reported crude stocks rose by 17.5 million barrels over the last two weeks.
- US crude stocks are 10.6 million barrels below 5-year average levels.
- US crude production is holding steady at a record level 13.2 mbpd.
- As of 8:05 am CST: Brent crude oil down $0.63 to $80.55, US dollar index down $0.241 to 104.160 while the nearby e-mini S&P 500 futures contract is down 1.25 to 4517.00.
Diesel
- The EIA reported diesel stocks fell 4.7 million barrels over the last two weeks.
- US diesel stocks are 16.6 million barrels below 5-year average levels.
- 4-week average diesel demand is steady with last year's levels.
Gasoline
- The EIA reported gasoline stocks fell 7.6 million barrels over the last two weeks.
- US gasoline stocks are 2.6 million barrels below 5-year average levels.
- 4-week average gasoline demand is up 1.9% vs year-ago levels.
Propane
- Conway is trading at .6150 while Belvieu is trading at .6300.
- Conway Swap Oct24-Mar25 trading ~.7150.
- Spot Conway is trading at 33% of WTI.
- The US is exporting 74% of production as of 10/27/23.
- The EIA reported propane stocks fell 770,000 barrels over the last two weeks.
Natural Gas
- Overnight weather runs added 7 HDDs through the two-week forecast.
- The EIA will report inventories at 9:30 am CT.
- Reuters estimates nat gas stocks rose between 22-43 Bcf last week.
Chinese Demand: Traffic levels in China have continued to recover and are up 5% this week to 157% of January 2021 levels. Last week saw a 3% increase w/w.
