Outlook: The energy complex is mixed this morning with diesel showing as the weakest leg down around a penny. Diesel and natural gas may be facing pressure with the weather forecast developing a warmer pattern over the next two weeks. Natural gas briefly dipped below $3.00 this morning and this will be a key area of support to watch into the close. The prompt crude spread has seen firmer backwardation since the expiration of the December contract but still remain well below the yearly average. Crude volatility has dropped considerably due to the recent sideways trade pattern which may be favorable for those looking to purchase options. Traders will shift attention to US weekly inventories today before focusing on the OPEC+ meeting tomorrow. The CME OPEC Watch tool suggests a 61% chance OPEC will delay production increases and Reuters reports yesterday suggest the delay will extend through Q1 2025.
Crude
- Venezuela’s oil exports jumped last month to nearly 1 mbpd and their highest level since 2020. Venezuela has been under US sanctions since 2019 while higher demand from Asia has helped fuel growth. (Reuters)
- A Reuters survey shows OPEC’s oil output rose by 180,000 bpd in November. Total OPEC 9 output sits at 21.252 mbpd and 16,000 bpd above their target.
- Israel said yesterday that it would return to war with Hezbollah if their truce collapses and that attacks would go deeper into Lebanon. (Reuters)
- 2nd month crude volatility has fallen to its lowest level since August.
- The API survey showed crude stocks rose 1.2 million barrels last week.
- Reuters estimates crude stocks fell 0.7 million barrels last week.
- OPEC+ will meet on Thursday this week.
- As of 8:45 am CST: Brent crude oil up $0.25 to $73.87, US dollar index up $0.216 to 106.581 while the nearby e-mini S&P 500 futures contract down up 17.25 to 6081.00.
Diesel
- The API survey showed diesel stocks rose 1 million barrels last week.
- Reuters estimates diesel stocks rose 0.9 million barrels last week.
- Group basis has continued to fall this week falling to -1800.
- Biden Administration officials announced that guidelines for the new clean fuel production tax credit will not be finalized before they leave office in January. This was part of a plan to generate sustainable aviation fuel production of 3 billion gallons by 2030.
Gasoline
- The API survey showed gasoline stocks rose 4.6 million barrels last week.
- Reuters estimates gasoline stocks rose 600,000 barrels last week.
- Exxon’s Joliet refinery is expected to run at reduced rates until January due to a malfunction last week.
Propane
- Conway futures are trading at .7575 while Belvieu is trading at .8075.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.7625.
- Conway propane is trading at 44% to WTI.
- OPIS estimates propane stocks fell 2.25 million barrels last week.
Natural Gas
- Overnight weather runs removed 9 HDDs through the two-week forecast.
- US natural gas inventories entered the heating season at their highest level since 2016 and sit 6% above 5-year average levels.
- March-April futures flipped into Contango yesterday which is abnormally early for the bearish structure.
- Reuters estimates nat gas stocks changed between -42 Bcf and +59 Bcf last week.
Continuous Daily NG:
