Outlook: The energy market is mixed this morning as traders weigh broad supply and demand expectations. Geopolitical risk has failed to build steam with the conflict in the Middle East growing stale, despite Hezbollah’s chief being taken on last Friday. Iran has remained removed from the situation and oil infrastructure has yet to be targeted to keep escalatory fears at bay. Chinese demand remains sluggish despite stimulus proposals with manufacturing data suggesting another month of contracting in September. Non-manufacturing showed marginal growth but less than expectations. Without a compelling bullish catalyst, the charts for crude, gas, and diesel all remain in a bearish tilt. Hurricane season has heated up with another tropical disturbance gaining confidence to enter the Gulf. A slightly more westward projection than Helene could produce a more direct impact of offshore production and refinery row.
Crude
- On Friday, Israel struck Hezbollah’s headquarters in Lebanon and killed their chief, Hassan Nasrallah. (BBG)
- Russia’s average oil processing for the first 25 days of September fell to the lowest since June at 5.28 mbpd amid seasonal maintenance. (BBG)
- A Reuters poll estimates WTI will average $77.64 in 2024, down from $78.82 previously.
- The OPEC+ panel will meet virtually on October 2nd.
- Another tropical disturbance has a 40% chance of forming a cyclone in the next 7 days with a path toward the Gulf.
- Vortexa reports global crude in floating storage is down 27% y/y at 60.76 million barrels.
- Money managers increased net length in WTI by 29k lots, the largest increase since June.
- China’s September manufacturing data reflected contraction for both the NBS and Caixin PMI.
- US manufacturing data will be reported tomorrow morning at 9:00 am CT.
- As of 8:31 am CST: Brent crude oil down $0.32 to $71.66, US dollar index up $0.032 to 100.413 while the nearby e-mini S&P 500 futures contract is down 7.25 to 5784.00.
Diesel
- The prompt diesel crack has risen nearly $4.50 from its September low.
- Oct-Nov spread trading -0.0177.
- Today is LTD for October ULSD.
Gasoline
- Money managers boosted net-long Nymex gasoline positions by the most since 2020 last week.
- Oct-Nov spread trading 0.028.
- Today is LTD for October RBOB.
Propane
- Conway is trading at .6325 while Belvieu is trading at .5750.
- Conway Swap Q4-Q1 2025 strip indicative midpoint ~.7175.
- Conway propane is trading at 40% to WTI.
Natural Gas
- Overnight weather runs removed 7 TDDs for the two-week forecast.
- Last week, Hurricane Helene caused roughly 4.7 million power outages across the Southeast US.
- Baker Hughes reported nat gas rigs rose by 3 to 99 last week.
India Refined Exports: India’s product exports have risen to their highest level in two years with refinery shutdowns in Europe leading to an uptick in demand. Diesel, gasoline, and jet fuel shipments are up 39% y/y at 1.5 mbpd. (Kpler)
