Outlook: Energies are higher across the board this morning despite a lack of fresh bullish considerations. Technical support may be a factor with WTI falling back below $70 which has previously triggered buying activity. The move higher remains marginal so far and may leave traders doubting whether the floor will hold. OPEC released its monthly report this morning which showed lower revisions for both 2024 and 2025 global oil demand growth. Until August, OPEC had left its bullish growth forecasts unchanged, but demand conditions primarily in China have forced them to react. OPEC trimmed China’s 2024 oil demand growth by 130,000 bpd to 450,000 bpd and said diesel use in September fell for a seventh consecutive month. Deflationary risk is mounting unless more compelling stimulus measures are put forward. The US dollar is higher again today as it holds at 4-month highs following the US presidential election. Look for US inflation data tomorrow and rhetoric from Fed officials this week to provide fresh influence.
Crude
- OPEC released its monthly report this morning and lowered both 2024 and 2025 oil demand forecasts.
- OPEC lowered its 2024 oil demand forecast from 1.93 mbpd to 1.82 mbpd and its 2025 forecast from 1.64 mbpd to 1.54 mbpd.
- The IEA and EIA will release their monthly reports later this week.
- WTI prompt spread lower to 9 cents this morning. Lowest since June.
- ATM WTI volatility has fallen to 33% from 40% earlier this month
- Reuters estimates crude stocks rose 1.1 million barrels last week.
- The API will report its inventory survey this afternoon after 3:30.
- US October CPI will be reported tomorrow morning at 7:30 am CT.
- As of 7:07 am CST: Brent crude oil up $0.47 to $72.30, US dollar index up $0.271 to 105.814 while the nearby e-mini S&P 500 futures contract is down 8.25 to 6023.00.
Diesel
- Reuters estimates diesel stocks fell 1.1 million barrels last week.
- OPEC reported China’s diesel demand fell for a seventh consecutive month in September.
- Diesel futures remain in contango through the Feb contract but the curve has been slowly tightening over the last few months.
- Medium-term support for HO may be found at the 50 DMA near $2.1986 which a breach opening the door to the October low near $2.10.
Gasoline
- Reuters estimates gasoline stocks fell 900,000 barrels last week.
- The continuous RBOB crack has risen over 60 cents in November with last trade around $14.22
- Continuous RBOB has trendline support near $1.9350.
Propane
- Conway futures are trading at .7275 while Belvieu is trading at .7975.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.7550.
- Conway propane is trading at 42% to WTI.
- Please let me know if you have targets for the 25/26 season. Values below 75c for the Oct-Mar strip has historically triggered buying.
Natural Gas
- Overnight weather runs added 1 HDDs for the two-week forecast.
- Natural gas futures surged yesterday while spot Henry Hub prices fell to a 25-year low.
- A strong weekend weather shift in favor of demand along with declining production have helped support prices.
- Reuters estimates nat gas stocks rose between 38 and 76 Bcf last week.
Continuous Prompt WTI Spread: The prompt WTI spread has traded to a fresh low of 9 cents this morning, which is lowest since early June. The market remains backwardated but a trend towards contango would hint toward bearish fundamentals.
