Outlook: Energies are beginning to lift from early session losses this morning and are hovering near even on the day. The complex is trending just below overbought levels which may be preventing a more convincing move lower driven by profit-taking. With the surge is geopolitical risk this week, participants may favor risk-on ahead of the weekend rather than collecting profit, but this dynamic could shift depending on today’s results. Brent is knocking on the door to break $90 and a successful challenge would feel bullish heading into next week. The surge in gold prices and Powell stressing uncertainty in the inflation battle may keep traders leery of getting over their skis. If a bearish economic domino falls, geopolitical risk could quickly be offset and halt the recent rally.
Crude
- The Trans Mountain pipeline is expected to provide all contracted volumes next month after completing the drilling project in Fraser Valley. (Reuters)
- Continuous nearby Brent is showing a golden cross with the 50-day MA crossing above the 200-day moving average. From a technical standpoint, this is seen as bullish and WTI is approaching the same structure.
- WTI traded above its upper Bollinger band yesterday but closed below the mark.
- Brent crude rejected a move above $90 yesterday and is working lower today.
- Dec/Dec WTI is trading at its highest level since the Russia/Ukraine war started.
- WTI options Vol continues to trend below historical averages which is favorable for buying options.
- The EIA reported crude stocks rose 3.2 million barrels last week.
- Fed Chair Jerome Powell said yesterday more assurances are needed that inflation is declining toward 2%.
- As of 8:38 am CST: Brent crude oil down $0.05 to $89.31, US dollar index down $0.268 to 103.981 while the nearby e-mini S&P 500 futures contract is up 35.25 to 5300.00.
Diesel
- Continuous diesel futures closed above its 50-day moving average yesterday.
- The EIA reported diesel stocks fell 1.2 million barrels last week.
- Four-week average diesel demand average 3.7 mbpd last week and is down 6.3% from year ago levels.
Gasoline
- The EIA reported gasoline stocks fell 4.2 million barrels last week.
- Gasoline inventories have fallen to their lowest level since December 2023.
- Four-week average gasoline demand averaged 9 mbpd last week and is 0.5% below year-ago levels.
Propane
- Conway is trading at .7925 while Belvieu is trading at .8400.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8500.
- Conway propane is trading at 38% to WTI.
- The EIA reported propane stocks fell 354,000 barrels last week.
Natural Gas
- Overnight weather runs removed 2 HDDs in the two-week forecast.
- The Biden Administration said they are open to ending a pause on approvals for LNG export facilities in exchange for Congress passing a new Ukrainian aid package.
- Reuters estimates nat gas stocks fell between 28 to 48 Bcf last week.
- The EIA will report inventories at 9:30 am CT.
Continuous Daily Brent: Another golden cross in energies following RBOB earlier this week. This time the continuous Brent contract has its 50-day MA crossing its 200-day. Brent rejected $90 yesterday but looks poised for a retest before the weekend.
