Outlook: Energies are holding marginal gains today and remain on track for a weekly gain. Gains of around ~3% on the week will come up short of recovering the ~7% decline seen last week. A lack of fresh market drivers appeared to keep volatility in check this week with Middle East developments few and far between and nothing new out of China. Oil fundamentals continue to show bearish illustrations with a large inventory build last week along with contracting time spreads. The continuous prompt WTI spread has seen a choppy decline since early July and could be poised for further downside if OPEC moves forward with unwinding production cuts later this year. The prompt spread hasn’t traded in contango since February.
Crude
- Israel’s chief Lieutenant General Herzi Halevi signaled that Israel was hoping to wrap up its operation in Lebanon, stating “in the north, there’s a possibility of reaching a sharp conclusion.” (Reuters)
- US Secretary of State Antony Blinken stated that he expected the revival of ceasefire talks between Israel and Hamas in the coming days. (Reuters)
- China’s lawmakers are scheduled to meet during the first week of November to discuss plans to refinance local government debt and provide details of the sales of government bonds for bank capital injections. (BBG)
- The prompt crude spread has fallen nearly 20 cents this week, with current trade near $0.35.
- Baker Hughes will report rig counts at 12:00 pm CT.
- Michigan consumer sentiment will be reported at 9:00 am CT.
- As of 8:44 am CST: Brent crude oil up $1.00 to $75.38, US dollar index down $0.008 to 104.050 while the nearby e-mini S&P 500 futures contract is up 33.25 to 5882.00.
Diesel
- Russia’s seaborne fuel shipments averaged 1.9 mbpd in the first 20 days of October, down 11% from September’s levels. (BBG)
- Russia’s gasoil exports are estimated to be down 10% m/m to 735,000 bpd. (BBG)
Gasoline
- AAA reported the national average gas price at $3.14, down 5 cents from last week.
- Continuous RBOB continues to find resistance at its 50 DMA near $2.0645.
Propane
- Conway futures are trading at .7200 while Belvieu is trading at .7775.
- Conway Swap Q4-Q1 25/26 strip indicative midpoint ~.7500.
- 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 removed 2 HDDs for the two-week forecast.
- The EIA reported natural gas stocks rose 80 Bcf last week.
- Total working gas inventories sit at 3,785 Bcf, 167 Bcf above 5-year seasonal average levels.
Continuous Daily RBOB: Look for $2.15 as the next upside target in RBOB if the 50 DMA is surpassed.
