Outlook: Energies are finding strength again this morning with crude and refined products all holding marginal gains. WTI is slowly filling the gap from its Sunday night move lower following the Israeli retaliation. $69.97 sits as the upside target for crude to completely fill the gap and this level along with $70 may provide resistance if strength persists. Positive news out of China is certainly helping this bounce with their Manufacturing sector showing contraction for the first time in six months. A shift in economic direction could stoke optimism that stimulus efforts are working and reports of additional stimulus yet to come could reinforce the trend. OPEC+ members will be closely watching Chinese demand with a production decision looming. In the US, core PCE data ran a little hot for last month while jobless claims looked supportive. The more closely watched Nonfarm payroll data will be reported tomorrow morning and may help put a stamp on the week.
Crude
- Yesterday, US officials discussed a proposal to enter a 60-day suspension of hostilities while mediators craft a peace deal with Hezbollah. (BBG)
- Three sources told Reuters that OPEC+ could delay planned December oil output hike due to soft demand and rising supply. (Reuters)
- Chinese manufacturing expanded for the first time in six months in October.
- The EIA reported US crude stocks fell 500,000 barrels last week.
- US net oil imports fell 300,000 bpd last week while input to refiners fell 31,000 bpd to support the unexpected draw.
- Crude imports from Saudi Arabia fell to their lowest levels since 2021.
- US core PCE was reported at 2.7% vs 2.6% est. PCE data is the preferred measure of inflation for the Fed.
- Nonfarm payrolls will be reported tomorrow morning at 7:30am CT.
- As of 8:10 am CST: Brent crude oil up $0.61 to $73.14, US dollar index down $0.073 to 103.921 while the nearby e-mini S&P 500 futures contract is down 39.25 to 5812.00.
Diesel
- The EIA reported diesel stocks fell 977,000 barrels last week vs -1.4mb est.
- Today is LTD for November HO.
- 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
- The EIA reported a much larger than expected draw for gasoline stocks of 2.7 million barrels last week.
- Weekly gasoline demand posted another over 9 mbpd which is viewed as supportive.
- Today is LTD for November RBOB.
Propane
- Conway futures are trading at .7550 while Belvieu is trading at .7875.
- Conway Swap Q4-Q1 25/26 strip indicative midpoint ~.8200.
- Conway propane is trading at 42% to WTI.
- The EIA reported propane stocks fell 236,000 barrels last week vs -600kb est.
Natural Gas
- Overnight weather runs removed 2 HDDs for the two-week forecast.
- December NG may look to fill the roll gap given the soft demand forecast.
- Reuters estimates nat gas stocks rose between 75 and 92 Bcf last week.
- The EIA will report inventories at 9:30 am CT.
Continuous Daily HO Crack: The prompt diesel crack closed at its highest level since early August yesterday. Diesel is showing premium to gasoline this week which may be reflecting a start to seasonal tendencies and helping support margins.
