Outlook: Energies have taken on a bearish tone this week and are lower across the board this morning. The hawkish view from the Fed this week was relatively expected but regardless, doesn’t bode well for medium-term energy demand. Reports that Israeli officials are meeting in Paris today are likely adding to the risk-off move as it provides optimism toward a ceasefire. The disruption in the Red Sea is slowly contributing to tighter global supplies and its impact continues to grow the longer diversions occur. US crude production remained steady last week at a record 13.3 mbpd while oil rig counts have been on the decline. Baker Hughes will report its updated weekly number at noon today.
Crude
- Israeli officials are in Paris for talks with Egypt, Qatar, and the US today which may be providing risk-off sentiment.
- The Fed maintained its hawkish stance this week expressing no rush to lift interest rates which is bearish for energy demand.
- JPMorgan’s demand indicators are showing oil demand up 1.7 mbpd this month so far, up 100,000 bpd from last week’s reading. (Reuters)
- The US is expected to announce another round of sanctions against Russia later today.
- The EIA reported US crude stocks rose 3.5 million barrels last week.
- US crude exports were strong last week rising to just shy of 5 mbpd.
- US refinery run rates remained unchanged at 80.6% as unplanned outages and maintenance persist.
- Baker Hughes will report its rig count at 12:00 pm CT.
- As of 8:57 am CST: Brent crude oil down $1.74 to $81.93, US dollar index down $0.095 to 103.862 while the nearby e-mini S&P 500 futures contract is up 18.25 to 5115.00.
Diesel
- The EIA reported diesel stocks fell 4.0 million barrels last week vs -1.7 mb est.
- 4-week average diesel demand is 0.6% below year-ago levels.
- Nearby continuous diesel futures are finding support at the 50-day moving average near $2.7022.
Gasoline
- The EIA reported gasoline stocks fell 300,000 barrels last week vs -2.1 mb est.
- 4-week average gasoline demand is 2.3% below year-ago levels.
- AAA reports the national average pump price at $3.267, up 19 cents from a month ago.
Propane
- Conway is trading at .7975 while Belvieu is trading at .8750.
- Conway Swap Oct24-Mar25 strip trading ~.8000.
- The EIA reported propane stocks fell 2.4 million barrels last week, just shy of the average estimate.
Natural Gas
- Overnight weather runs removed 7 HDDs in the two week forecast.
- The EIA reported natural gas stocks fell 60 Bcf last week, which fell below the average estimate.
- US natural gas stocks remain 265 Bcf above last year’s levels and 451 Bcf above 5-year average levels.
Continuous Daily NG: Another bearish inventory report for last week and a reduction of HDD’s into the weekend has natural gas back on a lower trajectory. A close below the 9-day moving average can be a short-term bearish indicator.
