Outlook: October RBOB futures have again tipped to contract lows, trading in the red while crude and diesel hold marginal gains today. The lack of conviction in the bounce certainly hints that the bears are maintaining control. Energies have tipped oversold and some technical buying and profit-taking may be provided support today. Reports that Libya is still loading oil cargoes despite production cuts and another employment report showing slower-than-expected job growth will challenge upside momentum. Crude has rejected trade in the $60s over the last several years but fundamental challenges are mounting with OPEC+ looking to unwind production cuts and major economies showing signs of stress which could impact demand. Yesterday’s API survey showed a significant draw in crude stocks for last week which could provide further support today if confirmed by the EIA. Larger crude draws ahead of the Labor Day weekend are traditional which may limit the market's reaction regardless. The EIA will report stats at 10:00 am today.
Crude
- Energies may be finding technical support after tipping oversold through the last two sessions.
- At least 11 tankers have loaded after August 26th in Libya despite ongoing export restrictions due to political unrest. (BBG)
- WTI’s second-month 25-delta put skew reached the most bearish since December yesterday.
- The ADP Employment report for August showed the weakest growth since January of 2021.
- Nonfarm Payrolls will be reported tomorrow at 7:30 am CT.
- Reuters estimates crude stocks fell 1 million barrels last week.
- The API survey showed crude stocks fell 7.4 million barrels last week.
- The EIA will report inventories at 10:00 am CT.
- As of 7:47 am CST: Brent crude oil up $0.63 to $73.33, US dollar index down $0.340 to 101.030 while the nearby e-mini S&P 500 futures contract is down 8.25 to 5521.00.
Diesel
- China’s diesel consumption is down 10% YTD while India’s diesel consumption is up 2.4% YTD. Both significantly trail last year’s growth.
- Reuters estimates diesel stocks rose 500,000 barrels last week.
- The API survey showed diesel stocks fell 400,000 barrels last week.
Gasoline
- Reuters estimates gasoline stocks rose 800,000 barrels last week.
- The API survey showed gasoline stocks fell 300,000 barrels last week.
- The EIA has underestimated weekly gasoline demand in 24 of the last 28 months with an upward average adjustment of 148,000 bpd. (BBG)
- October RBOB has fallen to new contract lows again today today.
- Cenovus energy began a 45-day turnaround at its refinery in Lima, Ohio.
Propane
- Conway is trading at .6975 while Belvieu is trading at .7200.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7475.
- Conway Swap Oct24 indicative midpoint ~.7225.
- Conway propane is trading at 43% to WTI.
- OPIS estimates propane stocks rose 1.6 million barrels last week.
Natural Gas
- Overnight weather runs added 6 CDDs for the two-week forecast.
- Reuters estimates nat gas stocks rose between 20 and 33 Bcf last week.
- The 5-year average injection for last week is 51 Bcf.
- The EIA will report inventories at 9:30 am CT.
Continuous Daily WTI: Two consecutive closes below the lower Bollinger may entice buyers today. Similar conditions are seen in both HO and RBOB.
