Outlook: The energy complex is mixed this morning with crude and gas hovering near even while diesel and natural gas slide lower. Heating demand continues to struggle with over 40 heating-degree days being removed from two-week forecasts over the last week. Diesel is finding additional pressure from bearish manufacturing data in the Eurozone. Chinese manufacturing did surprise to the upside, but mixed results over the last year have kept overall sentiment cautious. The US will report manufacturing data later this morning with another round of contractions expected. Jerome Powell is set to speak this afternoon which could give the market some late direction. Fallout from the OPEC+ meeting yesterday appears to have run its course but the group may meet again before year-end if necessary. If the bearish tone remains, the incentive will grow for OPEC to take further action.
- OPEC+ has extended its production cuts of 2 million bpd into Q1 of 2024. This includes voluntary cuts from Saudi Arabia and Russia.
- The US has conveyed to Venezuela it must define steps for lifting bans on opposition candidates and release wrongfully detained prisoners by the end of November for Sanction relief to remain in effect.
- US crude production in September hit a record level at 13.2 mbpd.
- Chinese manufacturing data came in better than expected, showing minor expansion for last month.
- US manufacturing data will be reported at 9:00 am CT.
- Fed Chair Jerome Powell will give a speech at 1:00 pm CT.
- Baker Hughes will report its rig count at 12:00 pm CT.
- As of 8:02 am CST: Brent crude oil down $0.08 to $80.78, US dollar index up $0.082 to 103.579 while the nearby e-mini S&P 500 futures contract is down 10.25 to 4566.00.
- Group 3 and Chicago diesel basis rose yesterday against the Nymex but remain discounted to 5-year average levels.
- The EIA reported September diesel demand fell by 4.1% vs last year.
- Europe’s ARA gasoil stocks fell 5.5% over the last week.
- Singapore middle distillate stocks fell 15% to 9 million barrels over the last week.
- The EIA reported September gasoline demand fell 0.2% vs last year.
- Europe’s ARA gasoline stocks rose 8% over the last week.
- Singapore light distillate stocks rose 1% to 11.797 million barrels over the last week.
- Conway is trading at .6400 while Belvieu is trading at .6800.
- Conway Swap Oct24-Mar25 strip trading ~.7200.
- Propane separated from crude yesterday as it traded higher against the rest of the complex. Propane’s value to crude edged up to 35%.
- Values down the curve fell despite the spot increase.
- Overnight weather runs removed 9 HDDs through the two-week forecast.
- Since last Wednesday, weather forecasts have removed 43 HDDs from two-week forecasts.
- The EIA reported inventories rose by 10 Bcf last week.
- Total working gas inventories are 303 Bcf above 5-year average levels.
Continuous Daily HO: With the expiration of the December contract, the continuous diesel chart gapped lower. Charts like to fill gaps and this will be an upside target if any upside momentum enters the market. The prompt spread has also shrunk to ~3.5 cents, down from 7.5 cents last month.