Outlook: Crude and gasoline are holding marginal gains this morning while diesel lags in the red. US diesel demand has been below the 5-year average 16 out of 18 weeks this year which is a glaring red flag for the overall health of the economy. With that being said, weaker data increases the chances the Fed will lean toward interest rate cuts which may limit bearish interpretations. A soft Michigan Consumer sentiment reading this morning reinforced declining economic confidence. Crude prices flirted with $80 this morning but don’t appear to have the momentum needed to break through psychological resistance. Continuous WTI has also developed a trade channel between the 100 and 200 day moving average which is slowly constricting and may lead to a breakout with a breach. Look for Fed chatter and any hint toward escalation in the Middle East to firm up market direction today.
Crude
- Israel remains in position for a full scale ground invasion of Rafah.
- Both China and India have shed positive demand signals this week to support the bullish trend.
- Another drone strike hit a Russian refinery, marking the second Ukrainian drone strike on Russian oil facilities in two days. (BBG)
- Concerns of fires interrupting crude production in Alberta are on the rise again as dry windy weather works back into the forecast.
- Continuous WTI’s 200-day moving average sits at $80.14 and may act as resistance today.
- Baker Hughes will report rig counts at 12:00 pm CT.
- Michigan Consumer Sentiment was reported at 67.4 vs 76.2 est.
- As of 9:04 am CST: Brent crude oil up $0.27 to $84.15, US dollar index down $0.097 to 105.155 while the nearby e-mini S&P 500 futures contract is up 17.25 to 5256.00.
Diesel
- Planting progress is expected to accelerate this week with a dry stretch of weather developing.
- Chicago and Group 3 diesel are trending in the lower 5-year range due to slower demand.
- Singapore middle distillate stocks fell 283,000 barrels to a 3 week low of 11.1 mb over the last week.
Gasoline
- This week’s Chinese traffic congestion readings posted a new high for the year with over 1.3 billion trips reported over the recent holiday.
- RBOB futures remain below the 9-day moving average which may act as resistance today.
- Singapore light distillate stocks fell 713,000 barrels to a 2 week low of 15.1 mb over the last week.
Propane
- Conway is trading at .6700 while Belvieu is trading at .6850.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7325.
- Conway propane is trading at 36% to WTI.
- Propane stocks rose 2.1 million barrels last week which exceeded the average industry estimate.
Natural Gas
- Overnight weather runs added 6 TDDs to the two-week forecast.
- The EIA reported natural gas stocks rose 79 Bcf last week to 2,563 Bcf.
- Natural gas stocks remain 33.3% above 5-year average levels.
- Natural gas futures have risen over 30 cents in the first 10 days of the month.
Continuous Weekly WTI: WTI is on pace to close above its 50-week moving average with a weekly increase.
