Outlook: The energy complex is finding a bit of a pop today with crude, gas, and diesel all in the green. Natural gas continues to fall under pressure with warmer weather developing and strong production. Energies were able to quickly overcome headlines that the OPEC+ meeting could face further delays which resulted in brief selling pressure. The situation remains volatile and uncertainty of what will unfold from the meeting when it eventually happens is on the rise. With no major bullish developments, the bounce today could be the market finding firmer footing. The declines over the last two months bode well for the inflationary battle which could be providing some comfort on the macroeconomic levels. Gasoline prices at the pump have fallen for 60 consecutive days which should be well received by the consumer during the holiday stretch. This week’s EIA data should give us an idea of travel demand over Thanksgiving, which was expected to reach pre-pandemic highs.
Crude
- Four OPEC sources this morning reported OPEC+ talks remain difficult and further delays are possible, according to Reuters.
- A weekend storm in the Black sea halted crude loadings at Russia’s Novorossiysk terminal this week. Flows are expected to resume tomorrow.
- Progress in refilling the SPR has been slowed in part by companies slowing the return of borrowed barrels. Three companies received US approval to delay the return of 5 mb until 2024 and 2025.
- Yesterday, the ceasefire in Gaza was extended by two days.
- Reuters estimates crude stocks fell by 2 million barrels last week.
- Crude oil money managers dropped their bullish bets to a 20-week low last week.
- The API will report its inventory survey this afternoon at 3:30 pm CT.
- As of 8:40 am CST: Brent crude oil up $0.84 to $80.82, US dollar index down $0.233 to 102.966 while the nearby e-mini S&P 500 futures contract is down 8.25 to 4552.00.
Diesel
- Be conscious of basis levels when forward contracting for customers as interest peaks this time of year. Unfavorable basis can be avoided by buying futures and purchasing basis at a later time if levels feel abnormally high. Spot values have remained soft at -30c.
- Reuters estimates diesel stocks rose by 900,000 barrels last week.
- HO managed money traders are net long 32,538 contracts after net selling 1,734 contracts last week.
- Asia’s jet fuel prices vs gasoil have hit their highest prices in 5 years on strong demand.
Gasoline
- Reuters estimates gasoline stocks rose by 1.4 million barrels last week.
- US gasoline prices at the pump have fallen for 60 consecutive days.
- RBOB managed money traders added 13,112 contracts to increase their net length to 64,380 contracts last week.
Propane
- Conway is trading at .6050 while Belvieu is trading at .6325.
- Conway Swap Oct24-Mar25 strip trading ~.6950.
- Spot Conway is trading at 34% of WTI.
Natural Gas
- Weekend weather runs removed 3 HDDs through the two-week forecast.
- Reuters estimates natural gas stocks fell between 9 and 31 Bcf last week.
- Low water levels in the Panama Canal continues to create logistical issues for exporting LNG out of the US.
Continuous 5 min WTI: WTI fell under pressure as headlines broke regarding further conflict among OPEC+ members and the potential for further delays. The market has since rebounded off its lows.
