Outlook: Momentum in the energy space looks to continue today with crude and products all observing strong gains for the second consecutive session. A dovish pivot in the macro space has heavily pressured the US dollar which in turn may be relieving some of the headwinds energies have faced. Interest rates being lifted sooner than expected would likely support energy demand and help erase some of the forecasted supply glut that has recently been priced in. However, monthly macroeconomic data, specifically inflation, will need to cooperate for this fresh forecast to come to fruition. Crude, gas, and diesel are all trading above their 9-day moving average which could provide technical support heading into the weekend. As for the broader trend, there remains work to do before the market adopts a bullish tilt.
Crude
- The IEA released its monthly report this morning showing revisions lower for 2023 and 2024 global oil demand.
- Of the three monthly reports this week, OPEC left global oil demand unchanged while the IEA and EIA made revisions lower.
- Russia’s oil export revenues in November fell to their lowest level in five months due to lower prices and stricter sanction enforcement.
- The EIA reported crude stocks fell by 4.2 million barrels last week.
- The Fed left interest rates unchanged yesterday.
- Fed fund futures suggest interest rate cuts as early at March next year.
- The BoE and ECB left interest rates unchanged today.
- As of 8:31 am CST: Brent crude oil up $2.29 to $76.54, US dollar index down $0.716 to 102.153 while the nearby e-mini S&P 500 futures contract is up 27.25 to 4734.00.
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 EIA reported diesel stocks rose by 1.4 million barrels last week.
- At 113.5 million barrels, diesel stocks are 15.5 million barrels below 5-year average levels.
Gasoline
- The EIA reported gasoline stocks rose by 408,000 barrels last week.
- US gasoline demand rose 4.6% last week to 8.8 mbpd and above 5-year average levels.
Propane
- Conway is trading at .6100 while Belvieu is trading at .6450.
- Conway Swap Oct24-Mar25 strip trading ~.6950.
- The EIA reported propane stocks fell by 1 million barrels last week.
- At 95.9 million barrels, propane stocks are 13.6 million barrels above 5-year average levels.
Natural Gas
- Overnight weather runs added 5 HDDs through the two-week forecast.
- Global LNG volumes stored at sea for more than 20 days rose to their highest seasonal level since 2019 and 70% higher than the six-year average this week.
- Reuters estimates natural gas stocks fell between 77 and 44 Bcf last week.
- The EIA will report stocks at 9:30 am CT.
India’s Oil Demand: India’s oil demand is expected to grow 150,000 bpd in 2024, down from 290,000 bpd from 2021-2023 according to Rystad Energy. India has been a key driver in demand this year as China struggles to meet expectations.
