Outlook: Energies are finding strength to start the week after tumbling to oversold levels last week. Weekend headlines are also lending support with an attempted assassination attempt on Israel’s prime minister while Israel stepped up bombings in Lebanon to target financial targets. Israel has still not launched their attack on Iran and the US is sending an envoy in an attempt to revive ceasefire talks this week. China cut lending rates again this morning after sluggish growth was reported for Q3 GDP on Friday. The rate cut fell in line with expectations but still sheds optimism with metals and energies shifting higher. The market still feels like it’s at the mercy of geopolitical developments in the Middle East but with the Iran assault stalling, it feels like a downside limiter rather than a bullish driver for now.
Crude
- Israel widened its bombing campaign in Lebanon over the weekend, targeting financial institutions it says help fund Hezbollah’s military operation. (BBG)
- US Secretary of State Antony Blinken is scheduled to travel to Israel today to initiate ceasefire negotiations.
- Iran exported its first-ever crude cargo outside of the Persian Gulf. The Jask oil terminal in the Gulf of Oman was built to bypass the Strait of Hormuz. (BBG)
- China cut 1-year and 5-year benchmark lending rates as anticipated earlier today. (Reuters)
- Saudi Aramco’s CEO said he is still “fairly bullish” on China’s oil demand in light of stepped-up policy support. (Reuters)
- Continuous WTI saw a key reversal lower on Friday.
- Baker Hughes reported oil rigs rose by 1 to 482 last week.
- November WTI will expire tomorrow.
- As of 8:36 am CST: Brent crude oil up $1.16 to $74.22, US dollar index up $0.145 to 103.638 while the nearby e-mini S&P 500 futures contract is down 4.25 to 5901.00.
Diesel
- Prompt HO futures saw a key reversal lower on Friday.
- Managed money decreased net length by 3.9k lots last week. (-3,433 longs, +549 shorts)
Gasoline
- Managed money increased net length by 10.4k lots last week. (+7,695 longs, -2,713 shorts)
- Nymex gasoline net length have risen for five consecutive weeks, longest run since April.
Propane
- Conway is trading at .6850 while Belvieu is trading at .7375.
- Conway Swap Q4-Q1 25/26 strip indicative midpoint ~.7300.
- Conway propane is trading at 42% to WTI.
Natural Gas
- Overnight weather runs added 11 HDDs for the two-week forecast.
- Baker Hughes reported nat gas rigs fell by 2 to 99 last week.
- Managed money decreased Nymex natural gas net length by 61.2k lots last week.
Global Oil Demand Forecasts: OPEC remains the most bullish on current year oil demand growth by a large chunk this year. The group’s growth continues to be led by Chinese demand which has struggled lately.
