Outlook: Upward momentum in the energy complex fizzled out yesterday following the bearish EIA inventory report. From a technical perspective, the daily continuous diesel chart ran into a brick wall of resistance at its 200-day MA and the downward trendline. RBOB is leading the group lower despite closing above its 50-day moving average yesterday. Reports that Angola is leaving OPEC could also present bearish risk as the release from quotas would allow them to produce as much oil as possible. It's worth noting that the country has been unable to meet their quotas while under OPEC since 2020 and production won’t be expected to rebound quickly. Energies look to be separated from outside markets today which have rallied following an underperforming GDP print for Q3. November PCE data will be reported tomorrow at 7:30 am CT followed by Michigan Consumer Sentiment at 9:00 am CT tomorrow.
Crude
- Angola has announced its withdrawal from OPEC. The country was one of the members recently in dispute over production quotas.
- Angola is currently producing 1.1 mbpd of oil, which was 350,000 bpd below their recent OPEC quota. The country produced over 1.6 mbpd of oil in 2018 but has been unable to recover production since the 2020 cuts.
- Yesterday, Canadian regulators denied the Trans Mountain Expansion Projects request for smaller pipes due to drilling challenges. The pipeline said the delay could add 2 years to the project which was expected to open in March.
- The EIA reported crude stocks rose by 2.9 million barrels last week.
- US crude production was revised higher to 13.3 mbpd.
- US Q3 GDP was reported at 4.9% vs 5.2% est.
- Q3 PCE data was reported at 2.6% vs 2.8% est.
- Outside markets traded higher following the negative macros with bad news meaning good news for the inflationary fight.
- As of 8:36 am CST: Brent crude oil down $1.30 to $78.40, US dollar index down $0.527 to 101.884 while the nearby e-mini S&P 500 futures contract is up 34.25 to 4783.00.
Diesel
- Prompt HO futures rejected a move above trendline support and its 200-day MA yesterday.
- The EIA reported diesel stocks rose by 1.4 million barrels last week.
- Diesel stocks remain 13 million barrels below 5-year average levels.
Gasoline
- The EIA reported gasoline stocks rose by 2.7 million barrels last week.
- Gasoline demand fell by 105,000 bpd last week to 8.7 mbpd.
Propane
- Conway is trading at .6275 while Belvieu is trading at .6775.
- Conway Swap Oct24-Mar25 strip trading ~.7300.
- The EIA reported a larger than expected draw of 2.2 million barrels for propane stocks last week.
- The US is exporting nearly 70% of its propane production, showing no signs of interruptions from shipping challenges in the Panama canal.
Natural Gas
- Overnight weather runs removed 11 HDDs through the two-week forecast.
- Record-breaking high temperatures are expected throughout the Midwest over the next 7 days.
- Reuters estimates natural gas stocks fell between 70-75 Bcf last week.
- The EIA will report inventories at 9:30 am CT.
Continuous Daily ULSD: A clear bounce off resistance for diesel futures yesterday to keep the downtrend intact.
