Outlook: Energies are finding strength today as hurricane Francine works through the Gulf knocking out crude and natural gas production. Global outages are also beginning to mount with Libya’s crude exports falling over 800,000 bpd last week. The EIA remains optimistic that global oil inventories will fall through the end of the year after increasing their deficit from 600,000 bpd to 900,000 bpd in its STEO report released yesterday. On the macro front, inflation data for last much looked positive as it fell in the lower range of estimates. Equities, however, reacted negatively which could be due to lesser odds of a 50 basis point cut from the Fed next week. US weekly fundamentals will be observed when the EIA reports later this morning. Cushing stocks are expected to have fallen again according to industry estimates and chatter of operation minimums is beginning to grow. This report should look tame relative to what we’ll see next week when we assess the impacts of Hurricane Francine. A technical bounce today should be taken with caution with the bears still feeling in control.
Crude
- Over 410,000 bpd of crude production is expected to be shut in due to hurricane Francine.
- Libya’s oil exports fell around 81% last week to 194,000 bpd, according to Reuters citing Kpler data.
- The EIA released its STEO report for August yesterday. The EIA made a marginal adjustment higher for 2024 crude production to 13.25 mbpd but lowered 2025 crude production to 13.67 mbpd.
- The EIA lowered its US liquids consumption to 20.33 mbpd in 2024, from 20.45 mbpd in its previous report.
- Reuters estimates crude stocks rose by 800,000 barrels last week.
- The API survey showed crude stocks fell 2.8 million barrels last week.
- US August CPI was reported at 2.5% vs 2.6% est. and 2.9% prev.
- The EIA will report inventories at 9:30 am CT.
- As of 7:52 am CST: Brent crude oil up $1.43 to $70.62, US dollar index up $0.155 to 101.785 while the nearby e-mini S&P 500 futures contract is down 17.25 to 5486.00.
Diesel
- Reuters estimates diesel stocks rose 300,000 barrels last week.
- The API survey showed diesel stocks rose 200,000 barrels last week.
- For retailers, short positions are advised to be covered at these price points, however holding excess length is not advised until we see a more compelling short-term trend change.
Gasoline
- Reuters estimates gasoline stocks fell 400,000 barrels last week.
- The API survey showed gasoline stocks fell 500,000 barrels last week.
Propane
- Conway is trading at .6500 while Belvieu is trading at .6350.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.6875.
- Conway propane is trading at 43% to WTI.
- Consider propane swaps for the 25/26 season to establish an early layer of coverage with values discounted to historical averages.
Natural Gas
- Overnight weather runs 2 CDDs for the two-week forecast.
- US LNG feedgas demand has fallen to 2-week lows due to hurricane Francine.
- Hurricane Francine has shut in 494k mcf/d or about 25% of the Gulf’s total gas production of 1.9 Bcf/d.
- Reuters estimates nat gas stocks rose between 49 and 68 Bcf last week.
EIA propane forecasts: The EIA forecast Mont Belvieu prices will average 80 cents during the 2024-2025 winter heating season. Midwest retail propane prices are expected to average $2.00 per gallon.
