Outlook: Energies are finding marginal strength this morning but certainly lack conviction for a broader rebound. With the dust settling in the Middle East, global fundamentals have again shifted into focus. The US announced late yesterday that it is looking to purchase another 3 million barrels for the SPR for next year. This could be the last purchase until additional funds for new purchases are granted. Big oil is showing signs of stress with BP reporting a 30% drop in profit for Q3. Softer demand along with economic pressures could continue to provide challenges as the calendar flips. A slew of economic reports will be in focus ahead of the election next week. The market is pricing in two 25 basis point cuts through the remaining two Fed meetings but any signs of unexpected weakness could quickly call for an accelerated approach. Early estimates for last week’s inventory changes haven’t looked all that supportive which could set the stage for further weakness if confirmed. The API will report its inventory survey this afternoon before the EIA reports tomorrow morning at 9:30 am CT.
Crude
- The US announced yesterday intent to purchase 3 million barrels of oil for the SPR for delivery through May. This purchase will all but extinguish current government funds until lawmakers approve more.
- The DoE has bought back over 55 million barrels at an average price of $76 while also canceling a sale of 140 million barrels through 2027.
- BP reported a 30% drop in third-quarter profit to $2.3 billion, the lowest in nearly 4 years. (Reuters)
- Continuous prompt WTI traded below its lower Bollinger band on Monday.
- Brent options trading hit a new record on Monday with more than a million December options expiring worthless. (BBG)
- The API will report its inventory survey today after 3:30 pm CT.
- Reuters estimates crude stocks rose 2.3 million barrels last week.
- Macroeconomic reports will pick up through the rest of the week starting with JOLTS jobs due out today at 9:00 am CT.
- As of 8:35 am CST: Brent crude oil up $0.40 to $71.82, US dollar index up $0.277 to 104.596 while the nearby e-mini S&P 500 futures contract is down 20.25 to 5841.00.
Diesel
- Russia’s refinery rates have averaged 5 mbpd MTD, which would be the lowest monthly level since 2022 if sustained. (BBG)
- Reuters estimates diesel stocks fell 1.6 million barrels last week.
- LTD for November HO is Thursday 10/31.
- Group diesel basis values continue to decline but remain in contango through December. We will roll out an inventory hedge recommendation when we see the right opportunity.
Gasoline
- Reuters estimates gasoline stocks rose 600,000 barrels last week.
- LTD for November RBOB is Thursday 10/31.
Propane
- Conway futures are trading at .7275 while Belvieu is trading at .7825.
- Conway Swap Q4-Q1 25/26 strip indicative midpoint ~.7350.
- Conway propane is trading at 42% to WTI.
Natural Gas
- Overnight weather runs added 2 HDDs for the two-week forecast.
- Natural gas prices fell nearly 30 cents yesterday as warmer weather revisions continue to populate while production remains strong.
- Today is LTD for November NG.
- Reuters estimates nat gas stocks rose between 75 and 92 Bcf last week.
November Daily RBOB: November RBOB is respecting trendline support with two days until expiry.
