Outlook: Energies are looking to hold the bullish weekly trend with crude up over a dollar this morning while refined products trade up over 3 cents. Natural gas futures continue on their volatile run and are trading up over 20 cents, adding over 55 cents on the week so far. Geopolitical developments between Russia and Ukraine remain in the spotlight while further indications that OPEC will further delay production increases provide bullish reinforcement. Whether or not Ukraine begins to focus strikes on oil or refining infrastructure remains the biggest upside risk along with the potential for renewed sanctions against Russian oil. Since September, oil has largely traded between $67-$72 aside of a brief window of trade in early October when oil hit $77. This trading range could provide guard rails moving forward until something substantially new develops to provide a shock to the complex.
Crude
- Ukraine’s Air Force has reported that Russia launched an intercontinental ballistic missile at the city of Dnipro, which would be the first use of an ICBM since the weapon was developed at the inception of the Cold War. (BBG)
- Three OPEC+ sources have told Reuters that the group may further delay planned production increases.
- Nigeria’s Dangote refinery purchased 2 million barrels of WTI Midland crude for the first time in 3 months. (BBG)
- Continuous WTI could find resistance at its 50 DMA near $70.63.
- The EIA reported crude stocks rose 545,000 barrels last week vs
- US Gulf Coast refineries are running at their highest seasonal level in over three decades.
- As of 8:37 am CST: Brent crude oil up $1.45 to $74.26, US dollar index down $0.038 to 106.640 while the nearby e-mini S&P 500 futures contract is down 5.25 to 5933.00.
Diesel
- The EIA reported diesel stocks fell 114,000 barrels last week vs -200kb est.
- Continuous HO could find resistance at its 100 DMA near $2.2828.
- Due to declining basis levels, we advise destocking bulk plants if you are holding product purchased at higher basis levels during the demand season.
Gasoline
- The EIA reported gasoline stocks rose 2 million barrels last week vs +900kb est.
- Gasoline stocks remain at their lowest seasonal level since 2014.
- Implied gasoline demand which includes exports fell 1.32 mbpd last week.
Propane
- Conway futures are trading at .7350 while Belvieu is trading at .8025.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.7425.
- Conway propane is trading at 44% to WTI.
- The EIA reported propane stocks fell 663,000 barrels last week vs -1.5mb est.
Natural Gas
- Overnight weather runs added 13 HDDs to the two week forecast.
- Natural gas futures are up nearly 20 cents this morning and have tacked on over ~55 cents on the week so far.
- Reuters estimates natural gas change between -1 and 14 Bcf last week.
Continuous Daily NG: Natural gas continues its surge as it trades up over 20 cents today. With the move, overbought signals are beginning to grow. A close above the upper Bollinger and an RSI value above 70 are both overbought indications.
