Outlook: The energy complex is cementing a strong week with prices in the green for a third consecutive day. Geopolitical developments are once again the catalyst for the week and has us in a similar situation to last Friday with traders awaiting another attack, but this time coming from Iran. As long as the exchanging of attacks continues to avoid energy and nuclear sites, prices should remain contained within recent trade ranges. On the demand front, China announced a supportive oil import quota for 2025 with a 6% increase over last year. China is believed to be filling reserves which may keep demand optimism at bay. It is, however, the second positive indication from China this week after Manufacturing grew for the first time in 6 months. In the US, payroll data saw a wide miss vs estimates and a sharp drop from the previous month. Private payrolls also saw their first negative print since 2020. The recent hurricanes are being attributed to the payroll volatility and markets overall saw a muted response.
Crude
- Late yesterday, Axios released a report stating that Israeli intelligence believes Iran is preparing to attack Israel from Iraq in the coming days. (BBG)
- Yesterday, Israel continued to strike Hezbollah in Lebanon despite talks of a truce proposal. (BBG)
- China issued its 2025 crude import quota at 5.16 mbpd, the highest level since 2019 and up 6% from 2024. (BBG)
- The EIA’s monthly report showed crude production hit a monthly record 13.4 mbpd in August.
- An investigation by a US Senate committee is underway regarding whether OPEC is colluding to manipulate oil prices. (BBG)
- Nonfarm payrolls were reported at 12k vs 113k est. and 223k last.
- Private payrolls were reported at -28k vs 70k est., which was the first negative payroll print since December 2020.
- Baker Hughes will report rig counts at 12:00 pm CT.
- As of 8:15 am CST: Brent crude oil up $1.77 to $74.58, US dollar index down $0.085 to 103.895 while the nearby e-mini S&P 500 futures contract is up 23.25 to 5761.00.
Diesel
- US diesel demand average 3.9 mbpd in August, highest since February. Y/y demand was down 177,000 bpd or 4.4%. (EIA)
- 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
- US gasoline demand for August was reported at 9.258 mbpd, up 0.2% or 17,000 bpd vs last year. (EIA)
- AAA reports the national average gas price at $3.12, down 2 cents from last week.
Propane
- Conway futures are trading at .7725 while Belvieu is trading at .8250.
- Conway Swap Q4-Q1 25/26 strip indicative midpoint ~.7625.
- 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 added 1 HDDs for the two-week forecast.
- December NG may look to fill the roll gap given the soft demand forecast.
- Dutch TTF is down 3% this morning is on track for a 9% weekly loss
- The EIA reported natural gas stocks rose 78 Bcf last week.
- Natural gas inventories at 3,863 Bcf are 178 Bcf above 5-year average levels.
Continuous Daily WTI: Three consecutive positive sessions has WTI testing resistance at its 50 DMA. Prices have also hit the range of consolidated trade prior to the selloff to start the week.
