Outlook: The energy complex has seen less volatility this week and is slowly establishing a positive week. Crude is up nearly 3% on week but still has work to do before recouping last week’s 7% decline. Military activity in the Middle East is keeping risk premium injected and may be offsetting hopes that US officials will make progress with their ceasefire negotiations this week. Israel has restated on multiple occasions this week that a strike against Iran still looms despite nearly a month passing since Iran’s missile strike. The market will remain sensitive to geopolitical developments which have overpowered bearish fundamentals this week. Managed money positioning will be important to watch to understand broader market interpretations and help determine trade ranges in focus.
Crude
- An uptick in military activity between Israel and Hezbollah continues to contribute to risk premium to the marketplace.
- US Secretary of State Antony Blinken is in Doha today to meet with Qatari officials, who have been key mediators for Hamas, to further ceasefire discussions. (BBG)
- The US is reporting that North Korea has placed troops in Russia to support war efforts.
- Saudi Arabia’s income from crude oil and refined products sales to $17.4 billion in August, down 6% from the previous month.
- The EIA reported crude stocks rose 5.4 million barrels last week vs +0.3 mb est.
- US net crude imports rose by ~900,000 bpd while input to refiners rose 329,000 bpd.
- As of 9:15 am CST: Brent crude oil up $0.36 to $75.32, US dollar index down $0.259 to 104.170 while the nearby e-mini S&P 500 futures contract is up 11.25 to 5849.00.
Diesel
- The EIA reported diesel stocks fell 1.1 million barrels last week vs -1.7 mb est.
- Group 3 diesel basis has begun its decent as seasonal demand winds down. Look for further weakness to maximize storage hedging opportunities.
- 4-week average diesel demand rose 27,000 bpd to 4 mbpd last week.
Gasoline
- The EIA reported gasoline stocks rose 900,000 barrels last week vs -1.2 mb est.
- 4-week average gasoline demand fell 92,000 bpd to 8.908 mbpd last week.
Propane
- Conway futures are trading at .7200 while Belvieu is trading at .7775.
- Conway Swap Q4-Q1 25/26 strip indicative midpoint ~.7550.
- Conway propane is trading at 42% to WTI.
- US propane stocks fell 1.3 million barrels last week supported by a 25% jump in exports to 1.922 mbpd.
Natural Gas
- Overnight weather runs added 8 HDDs for the two-week forecast.
- Reuters estimates nat gas stocks rose between 43 and 90 Bcf.
- The EIA will report inventories at 9:30 am CT.
Continuous Daily WTI: Crude has tested its 50 DMA for the second time this week but remains reluctant to establish bullish momentum.
