Outlook: Energies are getting hit hard this morning in follow-through selling from yesterday's late-day headline. The Washington Post reported Israel is willing to avoid energy and nuclear infrastructure in their looming retaliation which sent markets sharply lower just ahead of the 4:00 pm market close. The headline has spurred further liquidation as traders digest the situation further today. Israel has since denied the WaPo report, however, participants seem to be sticking with their conviction that the attack will be muted. As a result WTI is off nearly 4 dollars today while gas and diesel losses approach 10 cents. Crude values have continuously found support when falling below $70 and this looks like it will be tested again due to the de-escalatory development. With demand a lingering concern, expectations for oversupply are growing through 2025 and may provide a headwind if geopolitical risks remain under control.
Crude
- Israeli Prime Minister Netanyahu told the US late yesterday that they are willing to not strike Iran's oil targets. (Reuters)
- Israel expanded its targets in its war against Hezbollah in Lebanon on Monday, killing 21 in an airstrike. (Reuters)
- Russia’s crude oil exports totaled 23.14 million barrels last week, increasing 4-week average volume to its highest since July. (BBG)
- The IEA released its monthly report this morning which revised 2024 oil demand lower by 40,000 bpd to 860,000 bpd but increased its 2025 forecast by 50,000 bpd to 1 mbpd.
- The IEA lowered its 2024 Chinese demand forecast by 30,000 bpd to 150,000 bpd.
- Continuous WTI will look to close below its 50-day moving average today near $72.64.
- The EIA will report inventories on Thursday this week due to the Monday holiday.
- Reuters estimates crude stocks rose 2.6 million barrels last week.
- As of 8:57 am CST: Brent crude oil down $3.81 to $73.65, US dollar index down $0.257 to 103.041 while the nearby e-mini S&P 500 futures contract is up 1.25 to 5909.00.
Diesel
- Reuters estimates diesel stocks fell 2.4 million barrels last week.
- Continuous HO will look to close below its 50-day moving average today near $2.2360.
- Nov HO is off over 13 cents this week.
Gasoline
- Reuters estimates gasoline stocks fell 2.2 million barrels last week.
- Gasoline demand is expected to have plummeted last week in the aftermath of Hurricane Milton.
- Nov RBOB is off over 11 cents this week.
Propane
- Conway is trading at .7150 while Belvieu is trading at .7800.
- Conway Swap Q4-Q1 25/26 strip indicative midpoint ~.7700.
- Conway propane is trading at 41% to WTI.
- Propane resisted pressure from crude yesterday but may give way with an extension of losses today.
Natural Gas
- Overnight weather runs removed 1 HDDs for the two-week forecast.
- Nearly 2.3 million customers remained without power in Florida as of Friday.
- Reuters estimates nat gas stocks rose between 63 and 87 Bcf last week.
Conway Forward Curve: Opportunities down the curve are becoming more favorable for those looking to add length for seasonal propane demand windows.