Outlook: Energies again lack conviction this morning but are holding marginal gains. The OPEC+ meeting was largely a non-event with the plan well telegraphed in reports released earlier this week citing several delegates on the matter. The more notable adjustment beyond the delay was an extension of the runaway which will allow the production increases to be more gradual through 2026. The group also allowed the UAE to add an additional 300,000 bpd of production during the same period. While the decision will certainly keep barrels out of the market for longer, it also acknowledges the weaker demand environment driving their decision. OPEC has remained bullish in their demand forecasts but these actions suggest underperformance. On the macro front, the US dollar is off over 300 points this morning which could be providing support. Fed Chair Jerome Powell expressed optimism about the US economy yesterday but also reiterated that they may remain more cautious with unwinding cuts as they work toward neutral.
Crude
- OPEC+ met this morning and agreed to extend its voluntary 2.2 mbpd production cuts through March 2025. The group also announced an extension on fully unwinding cuts through 2026.
- OPEC+ agreed to let the UAE increase output by 300,000 bpd from April through the end of 2026 instead of starting in January.
- Libya is expected to export 1.1 mbpd of crude in December, down 40,000 bpd from November.
- Fed Chair Jerome Powell said the Fed can afford to be a little more cautious on moving policy toward a neutral setting given the recent health of the economy.
- The EIA reported US crude stocks fell 5 million barrels last week.
- US net crude imports rose ~800,000 bpd while input to refiners rose 615,000 bpd.
- Nonfarm payrolls will be reported tomorrow at 7:30 am CT.
- 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 EIA reported diesel stocks rose 3.3 million barrels last week vs +0.9 mb est.
- 4-week average diesel demand remained relatively flat at 3.75 mbpd despite a sharp drop in the weekly print.
- Russian diesel and gasoil exports rose 122,000 bpd to 828,000 bpd in November.
Gasoline
- The EIA reported gasoline stocks rose 2.3 million barrels last week vs +0.6 mb est.
- 4-week average gasoline demand fell 23,000 bpd to 8.7 mbpd, which is above the 5-year average level of 8.644 mbpd.
Propane
- Conway futures are trading at .7475 while Belvieu is trading at .7775.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.7625.
- Conway propane is trading at 44% to WTI.
- The EIA reported propane stocks fell 662,000 barrels last week vs -2.2 mb est.
- Domestic propane demand saw a sharp decline last week of 860,000 bpd, which was 51% of total demand.
Natural Gas
- Overnight weather runs added 2 HDDs through the two-week forecast.
- Natural gas found support at $3.00 yesterday after trading to a low of $2.977.
- Reuters estimates nat gas stocks changed between -42 Bcf and +59 Bcf last week.
Continuous 321 Crack: Crack spreads have fallen back to September lows. Refinery utilization is running at 4% above 5-year average levels at 93% capacity.
