Outlook: The bids have returned to catch energies from their free fall this morning and we are seeing crude and products up around 1%. With the sharp down day yesterday and markets tipping lightly oversold, shorts may be taking profits this morning ahead of the weekend. Bloomberg said yesterday that firms who buy oil to hedge their books are likely reducing their length due to declining economic sentiment and fear of demand destruction. Stop-loss selling events can create days like yesterday where it feels like the rug was pulled out without an obvious or fresh driver present. The market has shrugged off the US efforts to enforce the Russian price cap, even with three UAE vessels being sanctioned yesterday. The US has requested shipping records from 100 companies which will be something to keep an eye on as it could tighten markets if preventative measures prove effective.
- The US is targeting three UAE crude tankers that have been flagged for carrying Russian crude above the current price cap.
- More than 99% of Russia’s seaborne crude exports were sold above the $60 price cap last month, according to KSE Institute.
- The prompt WTI spread has flipped to its steepest Contango since June.
- Crude oil markets held a net spec and fund long of 420,666 contracts as of Oct 3rd, which was the highest since the middle of April, and could indicate the market remains susceptible to further stop-loss selling.
- Bloomberg said yesterday that large commodity trading companies are reducing their energy exposure because of the negative shift in the US economic outlook.
- Baker Hughes will report its rig count at 12:00 pm CT.
- As of 7:36 am CST: Brent crude oil up $1.17 to $78.68, US dollar index down $0.261 to 104.086 while the nearby e-mini S&P 500 futures contract is up 14.25 to 4537.00.
- Diesel stocks at Europe’s ARA hub have fallen to their lowest seasonal level since 2008.
- US TSA total traveler throughput on a 7-day average is 6.6% above 2019 levels.
- Gasoline stocks at Europe’s ARA hub rose 3.5% over the last week.
- AAA reports the national average gas price at $3.33, down 6 cents from last week.
- Conway is trading at .5950 while Belvieu is trading at .6125.
- Conway Swap Oct24-Mar25 trading ~.6900.
- Spot Conway is trading at 33% of WTI.
- With spot prices below 60c, deferred swap values have mostly fallen below 70 cents. Please reach out for updated values.
- Overnight weather runs added 1 HDDs through the two-week forecast.
- The EIA reported nat gas stocks rose by 60 Bcf last week.
- Working gas inventories at the end of October totaled 3,776 Bcf, which is the second-highest end-of-fill season inventory in 5 years.
Continuous Daily HO: Diesel futures once again closed below its 200-day moving average yesterday. Look for this level to provide resistance if buying gains momentum today.