Outlook: Oversold markets may be preventing further downside this morning despite another round of bearish Chinese data showing new loans in October much lower than expected. OPEC also released its monthly report this morning with rhetoric aimed to calm demand fears. The group feels current price action is driven by speculators and is overdone given where they see future demand growth. The report showed November production fell by 57,000 bpd led by Iraq, Angola, and Nigeria. Attention will shift toward US fundamentals with the release of inventory stats from the EIA this morning. The API survey showed another large build in gasoline stocks which could hint to a combination of soft demand and higher refinery run rates. The Fed will help close the day out with its interest rate decision, which is expected to result in no change to current rates.
Crude
- OPEC blamed exaggerated demand concerns for recent price action following the release of their monthly report.
- OPEC left their 2023 and 2024 world oil demand forecast unchanged.
- OPEC crude production fell by 57,000 bpd to 27.84 mbpd in November.
- The EIA lowered its 2023 and 2024 global oil demand growth in its monthly report released yesterday.
- The COP28 ended today with a deal to transition away from fossil fuels in a “quick and orderly fashion”
- Reuters estimates crude stocks fell by 70,000 barrels last week.
- The API survey showed crude stocks fell by 2.3 million barrels last week.
- US November CPI was reported at 3.1% vs 3.2% previous.
- The Fed will announce its interest rate decision today at 1:00 pm CT.
- As of 7:45 am CST: Brent crude oil up $0.58 to $73.83, US dollar index down $0.014 to 103.861 while the nearby e-mini S&P 500 futures contract is up 9.25 to 4655.00.
Diesel
- Regional diesel basis remains soft throughout the country and the backwardation in the prompt spread continues to fall. Both are favorable for filling storage and selling futures to hedge.
- The API survey yesterday showed diesel stocks rose by 300,000 barrels last week.
- Reuters estimates diesel stocks rose by 600,000 barrels last week.
Gasoline
- The API survey yesterday showed gasoline stocks rose by 5.8 million barrels last week.
- Reuters estimates gasoline stocks rose by 1.9 million barrels last week.
- Nearby RBOB closed below $2.00 yesterday for the first time in two years.
Propane
- Conway is trading at .6175 while Belvieu is trading at .6525.
- Conway Swap Oct24-Mar25 strip trading ~.7000.
- Propane values for next year remain favorable for establishing early length if you haven’t already.
Natural Gas
- Overnight weather runs removed 4 HDDs through the two-week forecast.
- Temperature forecasts are 134 HDDs below last year and 49 HDDs below the 10-year average.
- Reuters estimates natural gas stocks fell between 77 and 44 Bcf last week.
Continuous Daily HO: Diesel remains the most resilient to downside moves as it retains the largest premium to yearly lows. Favorable crack spreads and refineries coming out of turnaround could begin to pressure products.
