Outlook: The energy complex is moving lower this morning but the weakness remains muted so far. October WTI is off around 20 cents during its final day of trade while November WTI trades at nearly a dollar discount and will enter the prompt spot on Monday. A broader market shift toward buying has propped up energies again this week as it heads for weekly gains. Geopolitical escalations also lurk following the flurry of attacks mid-week. The US labor market will be a key area of focus moving forward as the Fed navigates the scale of its rate cuts. The path seems unlikely to be linear toward a soft landing and volatile swings should be expected. Chinese demand has proved to also be a momentum killer and optimism for growth in the near future appears lacking. Crude prices have found support in the $60s roughly ~4 different times since 2023 and is clearly identified as critical support. OPEC+ will present its World Oil Outlook 2024 at a conference in Rio de Janeiro next week which could provide fresh insight into the groups intentions for unwinding production cuts.
Crude
- Oil prices are looking to end the week positive for the second consecutive week.
- US crude refiners are planning less turnaround this fall with 529,000 bpd of refining capacity expected to be offline. This compares to last year at 1.02 mbpd and 2022 at 750,000 bpd. (BBG)
- Roughly 1.8 mbpd of refining capacity has been added across the globe this year (Reuters)
- Rising tensions after a series of attacks in the Middle East this week remain an upside risk.
- A new tropical system is gaining confidence and poses fresh risk to the Gulf.
- Fed rate cuts should continue to be supportive unless the labor market concerns grow.
- Baker Hughes will report rig counts at 12:00 pm CT.
- As of 8:55 am CST: Brent crude oil down $0.53 to $74.36, US dollar index up $0.178 to 100.792 while the nearby e-mini S&P 500 futures contract is down 15.25 to 5700.00.
Diesel
- China kept their 2024 export quota in line with 2023 quotas at 41mm tons. (BBG)
- Refinery output in China slowed for a fifth month in August. (Reuters)
- 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
- AAA reports the national average retail gas price at $3.22, down a penny from last week.
- The November RBOB crack has risen nearly $2 this week and traded back above $14 yesterday.
Propane
- Conway is trading at .6800 while Belvieu is trading at .6700.
- Conway Swap Q4-Q1 2025 strip indicative midpoint ~.7350.
- Conway propane is trading at 39% to WTI.
Natural Gas
- Overnight weather runs added 2 HDDs for the two-week forecast.
- The EIA reported a 58 Bcf injection into storage for last week.
- At 3,445 Bcf, natural gas stocks remain 275 Bcf above 5-year average levels.
Continuous Daily WTI: WTI has a cushion to maintain short-term bullish momentum if it remains above its 9-day moving average prior to expiration today. Psychological support at $70 is there for reinforcement.
