Morning Highlights
Morning Highlights

9-4-24 Energies slide despite OPEC+ rumors...


Riley Schwieger

Sep 4, 2024

Outlook: Bearish momentum looks to continue today with WTI futures trading below $70 for the first time since January. The complex has shrugged off the idea that OPEC+ may now delay the unwinding of production cuts from October to December, but this remains speculation until the group officials meet in a month. Citigroup expressed a stronger bearish opinion today stating oil prices could slip to $60 if OPEC doesn’t add additional cuts while demand remains soft. Additional cuts among OPEC+ members have not been mentioned and seem unlikely but a strong recession could quickly change that. JOLTS jobs will be reported here this morning before the more anticipated Nonfarm payrolls gets reported on Friday. Inventory reports are delayed by a day this week due to the Monday holiday so the API will report this afternoon and the EIA will report tomorrow morning.

Crude

  • Several OPEC+ delegates have now said the group may postpone its plan to start unwinding cuts in October following the recent price decline. (Reuters)
  • Citigroup said Oil could average $60 in 2025 if OPEC+ does not cut more than current levels.
  • Crude spreads look less bearish than outrights with strong backwardation still seen down the crude curve.
  • US Manufacturing data showed larger than expected contractions last month.
  • JOLTS jobs will be reported at 9:00 am CT.
  • Reuters estimates crude stocks fell 600,000 barrels last week.
  • The EIA will report inventories on Thursday at 10:00am CT due to the Monday market holiday.
  • As of 8:31 am CST: Brent crude oil down $0.57 to $73.18, US dollar index down $0.190 to 101.635 while the nearby e-mini S&P 500 futures contract is down 15.25 to 5526.00.

Diesel

  • Reuters estimates diesel stocks rose 400,000 barrels last week.
  • Group 3 basis values have crossed above 5-year average levels, trading around +0.015.

Gasoline

  • Reuters estimates gasoline stocks rose 800,000 barrels last week.
  • RBOB futures closed at their lowest level since December 2021 yesterday.
  • October RBOB has fallen to new contract lows today.
  • Cenovus energy began a 45-day turnaround at its refinery in Lima, Ohio.

Propane

  • Conway is trading at .7025 while Belvieu is trading at .7575.
  • Conway Swap Oct24-Mar25 strip indicative midpoint ~.7500.
  • Conway Swap Oct24 indicative midpoint ~.7275.
  • Conway propane is trading at 42% to WTI.

Natural Gas

  • Overnight weather runs added 4 CDDs for the two-week forecast.
  • Reuters estimates nat gas stocks rose between 20 and 33 Bcf last week.
  • Baker Hughes report nat gas rigs fell by 2 to 95 last week.

Continuous Daily HO: Diesel futures are trading at their lowest level since May 2023. The multi-year low of $2.15 may provide support if prices continue lower.