Outlook: Energies are retreating this morning but remain on track for weekly gains. Escalations between Russia and Ukraine have been the key theme this week which has helped support prices. The Kremlin said today that their use of a newly developed hypersonic ballistic missile was a message to the West that Moscow will respond harshly to any reckless actions from the West in support of Ukraine. In other supportive news, China’s crude imports are expected to rebound in November which would break a 6-month streak of declines. China also announces policies this week to support exports, with speculation that more aggressive policies could be used to mitigate potential tariffs from the US. While China sheds a glimmer of demand hope, the Euro Zone did not today after reporting a sharp unexpected retraction in business activity. Manufacturing also saw contraction which aligns with softer diesel imports shown in the chart below. Prices are inching off the lows with WTI trading near even and the market could be susceptible to a risk-on shift today if the right headline develops.
Crude
- Eurozone business activity saw a sharp unexpected contraction this month, working deeper into recession. (Reuters)
- Kazakhstan’s Tengiz oilfield is scheduled to return to full production in early December. (Reuters)
- OPEC+ is expected to hold their December meeting online according to several delegates. Online meetings historically have been an indication of no policy adjustments. (Reuters)
- China’s crude imports are expected to rebound to over 10 mbpd in November, which would be highest since 2023.
- US monthly average waterborne imports fell by 37% y/y in October and to their lowest level since April 2020. (Reuters)
- Baker Hughes will report rig counts at 12:00 pm CT.
- As of 8:05 am CST: Brent crude oil down $0.48 to $73.75, US dollar index up $0.445 to 107.417 while the nearby e-mini S&P 500 futures contract is down 3.25 to 5967.00.
Diesel
- European diesel imports are expected to fall to four-month lows in November. Europe’s top three suppliers are Saudi Arabia, the US, and India.
- Around 784 million biodiesel (D4) blending credits were generated in October, up from 768 million in September, according to the EPA.
- 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 US DOT is forecasting this holiday season could be the busiest on record.
- AAA reports the national average gas price at $3.06, down 11 cents from last month. Cheaper prices at the pump are timely this year for holiday travel.
- Around 1.27 billion ethanol (D6) blending credits were generated in October, up from 1.21 billion in September, according to the EPA.
- US imports of European gasoline to the East Coast have fallen to their lowest levels since 2016.
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.
- Midwest propane stocks sit at 29 million barrels, which is 12% more than the 5-year average and 8% above last year. Gulf stocks sit at 57 million barrels and are 12% above 5-year average levels.
Natural Gas
- Overnight weather runs added 1 HDDs to the two week forecast.
- Gas prices in Europe and Asia have risen to 11-month highs this week.
- The EIA reported natural gas stocks fell by 3 Bcf last week vs +6 Bcf est. Stocks sit 6.4% above 5-year average levels.
European diesel imports:
