Outlook: Energies are looking for direction this morning after securing positive gains last week. Traders appear reluctant to drive the market based on geopolitical risk despite Israel launching its most widespread attack since the conflict began over the weekend. As has been said many times, as long as the war avoids energy infrastructure or Iran becomes directly involved, the impact on the physical crude markets remains minimal. Another tropical storm is tracking for the Gulf but is forecasted to move through to the east of “refinery row”. Offshore production will still be susceptible and may be adding premium to crude and natural gas prices today. The market's reluctance to make a more convincing move higher seems to hint that demand concerns remain top of mind. Unexpected contractions in Eurozone business activity and lack of progress in China are two bearish topics with traction today.
Crude
- Oil prices rose 4% last week.
- Shell announced that it will be shutting down production at two offshore rigs in the Gulf as a precautionary measure with tropical storm Helene.
- The National Weather Service stated the tropical system in the Gulf has a 50% chance of developing into a cyclone in the next 48 hours.
- The Israeli military launched a widespread wave of airstrikes against Hezbollah over the weekend.
- Libya’s exports rose back to 719,000 bpd last week but remain below capacity of over 1 million bpd.
- India’s crude imports rose 6.4% y/y and 2% m/m in August.
- Eurozone business activity unexpectedly contracted in September.
- Baker Hughes reported oil rigs remained flat at 488 last week.
- As of 8:45 am CST: Brent crude oil up $0.07 to $74.56, US dollar index up $0.159 to 100.882 while the nearby e-mini S&P 500 futures contract is up 15.25 to 5769.00.
Diesel
- Managed money decreased HO net length by 6.6k lots last week.
- The diesel futures curve remains in Contango through the February contract.
- Diesel futures rose ~7 cents last week.
- Harvest progress is expected to accelerate with forecasts showing minimal precip over the next two weeks.
Gasoline
- Managed money increased RBOB net length by 3.3k lots last week.
- RBOB futures rose ~3 cents last week.
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 removed 2 TDDs for the two-week forecast.
- Another storm developing with a track for the Gulf could impact natural gas production this week.
- Baker Hughes reported nat gas rigs fell by 1 to 96 last week.
Storm Watch: If Helene were to strengthen to a hurricane, the current storm path avoids the bulk of refining infrastructure. Offshore crude and natural gas platforms will however be at risk with Shell already announcing the closure of two facilities.
