Outlook: Early gains have given way to negative prices this morning as the bears look to regain control following the sharp selloff on Monday. The theme of soft demand has created strong negative sentiment across energies and a lack of escalation recently in the Middle East weakened the strength of the floor. A test of trendline support appears imminent across crude and refined product charts and a close below these levels could invite a test of October and September lows. Inauguration day is still 2-months away but Trump is expected to select Marco Rubio for Secretary of State, who is known for his strong stance on Iran, China, and Cuba. Iran has said it is prepared for stricter sanctions and will continue to grow production and exports. A new tropical disturbance has developed with the potential to enter the Gulf but isn’t expected to path toward the energy belt. Inventory reports are delayed by a day this week so we won’t see EIA stats until tomorrow morning at 10:00 am CT.
Crude
- Iran’s oil minister said the country has made plans to sustain oil production and exports and is ready for possible oil restrictions from the US. (Reuters)
- 184,000 bpd of crude production remains offline in the aftermath of Hurricane Rafael. (Reuters)
- Nigeria expects a 30% increase in crude production by year end which would put output near 2 mbpd. Nigeria’s OPEC production quota is 1.5 mbpd. (BBG)
- Russia’s seaborne crude exports rose by 260,000 bpd last week. (BBG)
- China’s cement production fell by 10% in the first nine months of this year. Cement production is extremely energy intensive and can negatively impact demand. (BBG)
- US October CPI was reported at 2.6% vs 2.6% est. and 2.4% last. Core CPI remained flat at 3.3%.
- The API will report its inventory survey today after 3:30 pm CT
- The EIA will report inventories tomorrow morning at 10:00 am CT.
- As of 8:23 am CST: Brent crude oil down $0.41 to $71.48, US dollar index down $0.173 to 105.851 while the nearby e-mini S&P 500 futures contract is up 3.25 to 6016.00.
Diesel
- Reuters estimates diesel stocks fell 1.1 million barrels last week.
- Continuous HO is respecting support near its 50 DMA at $2.1997.
- Group 3 and Chicago diesel basis continued weaker yesterday.
Gasoline
- Reuters estimates gasoline stocks fell 900,000 barrels last week.
- Gasoline remains reluctant to shed premium to diesel but future inventory reports over the next month could present a weaker tone.
- Continuous RBOB has trendline support near $1.9350.
Propane
- Conway futures are trading at .7375 while Belvieu is trading at .8025.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.7500.
- Conway propane is trading at 45% to WTI.
Natural Gas
- Overnight weather runs removed 5 HDDs for the two-week forecast.
- Weather in the lower 48 is expected to remain above normal through Nov 20th but shift colder in the back third of the month.
- Reuters estimates nat gas stocks rose between 38 and 76 Bcf last week.
Continuous Daily WTI: Trendline support sits around $67.10 and will be a level to watch in crude today.
