Outlook: Energies are finding marginal gains this morning but the technical rebound yesterday and various ongoing supply outages have yet to reflect a compelling sentiment shift. Hurricane Francine did strengthen to a category 2 but has since simmered as it works inland. Various ports have reopened without restriction and Gulf production should begin restarting. The IEA joined the party today making lower revisions to both its 2024 and 2025 global oil demand forecasts. The agency cut its growth forecast by 7% m/m and remains the least bullish for growth relative to the EIA and OPEC. Macroeconomics continue to sit in the driver's seat with demand growth outside of China becoming more of the focus. US August PPI was reported higher than expected for both headline and core this morning but bets remain overwhelmingly in favor of the Fed sticking to a 25 basis point cut next week. Refined fuel contracting has seen an uptick with values falling to multi-year lows and prices down the curve into 2025 look favorable to budgets. It’s recommended to keep DPRs tight as sales come through due to the market remaining vulnerable to volatile price swings.
Crude
- Hurricane Francine strengthened to a category 2 storm yesterday and shut in 675,000 bpd of crude production in the Gulf. (Reuters)
- The IEA released its monthly report today showing a revision lower for 2024 global oil demand growth by 70,000 bpd to 900,000 bpd and 30,000 bpd to 950,000 bpd for 2025.
- Crack spreads are retreating today with the 321 crack trading back below $15.
- The ECP cut deposit facility interest rates by 25 bps to 3.5% which met expectations.
- US August CPI was reported at 2.5% vs 2.6% est. and 2.9% prev.
- The EIA reported crude stocks rose 800,000 barrels last week.
- As of 8:12 am CST: Brent crude oil up $0.26 to $71.36, US dollar index down $0.064 to 101.620 while the nearby e-mini S&P 500 futures contract is up 9.25 to 5570.00.
Diesel
- The EIA reported diesel stocks rose 2.3 million barrels last week vs +0.3 mb est.
- France’s oil product sales rose 3.3% to 4.75m tons in August. (BBG)
- 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
- Refineries in Louisiana are running at reduced rates due to the storm with a 523,000 bpd refinery operating at 20% capacity. (Reuters)
- The EIA reported gasoline stocks rose 2.3 million barrels last week vs -0.1 mb est.
Propane
- Conway is trading at .6700 while Belvieu is trading at .6450.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7025.
- Conway propane is trading at 43% to WTI.
- Winter strip values for 25/26 were indicated at ~70.5 cents yesterday. Please reach out for updated values or if you have price targets to start layering.
Natural Gas
- Overnight weather runs were unchanged for the two-week forecast.
- Hurricane Francine has slid east of the majority of LNG export facilities which has given priority to production outages.
- Reuters estimates nat gas stocks rose between 49 and 68 Bcf last week.
- The EIA will report inventories at 9:30 am CT.
Continuous Weekly 321 Crack: Crack spreads have continued on a lower trajectory but may begin to find support with the refinery maintenance season. Outages due to Francine have yet to show reason for concern.
