Outlook: The energy complex is seeing momentum stall and is positioned in the red for the first time since last Wednesday. Crude and diesel saw breakout moves yesterday on several different technical indications, however, both have spent substantial time in overbought territory which may be a building headwind. If profit-taking can remain moderate today, this week’s COT report should provide a good picture of how aggressively the funds reacted to the developments in the Middle East. Given the low long/short ratio before the escalation, a considerable amount of length may have been added in anticipation of higher prices. Rhetoric out of China may also be weighing today as previous stimulus measures were discussed while details of size and further stimulus were left out. Headlines outside of the Middle East conflict have been relatively overshadowed over the last week and they may continue to be less impactful until we see closure on Israel’s retaliation.
Crude
- China’s National Development and Reform Commission reiterated the Politburo’s pledge to accelerate the implementation of previously announced basket of incremental policy measures. They did not, however, announce any additional stimulus.
- Israel’s defense minister is scheduled to travel to Washington tomorrow to discuss Middle East security developments.
- Russia’s primary oil refining fell by 215,000 bpd to 5.06 mbpd in the first two days of October, which is the lowest processing rate since March amid maintenance cycles.
- Hurricane Milton is expected to make landfall Thursday morning producing storm surge of 10-15 feet to the Tampa Bay area.
- Reuters estimates crude stocks rose 1.9 million barrels last week.
- The API will report its inventory survey after 3:30 pm CT today.
- The FOMC meeting minutes will be released tomorrow before September CPI reports on Thursday.
- As of 8:00 am CST: Brent crude oil down $1.46 to $79.46, US dollar index down $0.052 to 102.484 while the nearby e-mini S&P 500 futures contract is up 21.25 to 5766.00.
Diesel
- Reuters estimates diesel stocks fell 2.3 million barrels last week.
- Continuous HO closed above its 100 DMA yesterday.
- Continuous HO 14-day RSI moved above 70 yesterday which is an indication of overbought levels.
Gasoline
- Reuters estimates gasoline stocks fell 1.5 million barrels last week.
- Continuous RBOB closed above its 50 DMA yesterday.
Propane
- Conway is trading at .7925 while Belvieu is trading at .8400.
- Conway Swap Q4-Q1 25/26 strip indicative midpoint ~.7825.
- Conway propane is trading at 40% to WTI.
Natural Gas
- Overnight weather runs added 15 TDDs for the two-week forecast.
- Gas prices in the Florida region are falling due to expected demand loss from power reduction due to Hurricane Milton
- Reuters estimates nat gas stocks rose between 66 and 77 Bcf last week.
Continuous Daily HO: Diesel has spent 4 sessions above its upper Bollinger and saw an RSI value over 70 yesterday to indicate overbought conditions. Look for yesterday’s low at $2.3037 for near-term support.
