6301 Ralston Road – Arvada, CO 80002

Bryant Gimlin, Energy Risk Manager ~ Office: (303) 350-3757 Cell: (970) 590-8782

Daily Market Comments for: For Friday, September 30, 2022

 

Date

Crude Oil

Diesel

RBOB

Natural Gas

09/23/2022

$78.74 X22

$3.2371 V22

$2.3830 V22

$6.8280 V22

09/26/2022

$76.71 X22

$3.1291 V22

$2.3842 V22

$6.9030 V22

09/27/2022

$78.50 X22

$3.2599 V22

$2.4931 V22

$6.6510 V22

09/28/2022

$82.15 X22

$3.4494 V22

$2.5779 V22

$6.8680 V22

09/29/2022

$81.23 X22

$3.4146 V22

$2.5076 V22

$6.8740 X22

 

In the News:  The Wednesday session saw prices move sharply higher on several support items; weekly inventory data, OPEC+ production cuts, higher equity markets, a lower U.S. Dollar, and Hurricane Ian.  And just like that all that support seemed to dry up.  The Dollar moved back higher, the DOW settled 458 lower at 29,225 and the NASDAQ plummeted 314 lower to 10,737.  It is quite apparent the economy is the main influence on energy futures.  Fundamentals alone should be supporting prices with across-the-board stock draws, lower production, and higher demand.  Compared to the five-year average Crude Oil stocks are 2% below; Gasoline stocks are 6% below; Distillate stocks are 20% below.  The draw in Crude Oil stocks was despite a 4.6-million-barrel influx from the Strategic Petroleum Reserve, which is down to 422.6 million barrels from 618.7 million barrels last year.  Weekly demand showed Gasoline up 503,000-bpd to 8.825-mbpd; Distillate was up 769,000-bpd to 4.178-mbpd, (lower prices do help).  Refinery Utilization was down 3.0% to 90.6% of capacity due to several unplanned outages.

 

Products:  Chicago Gasoline basis pulled back a bit yet remains extremely higher due to a full outage at BP-Cenovus 156,000-bpd Oregon, due to fire and explosion and a partial outage, (1 FCC unit), at BP’s 440,000-bpd Whiting refinery from an Aug 24th electrical fire.   Basis in the Rockies is also moving higher as the HFSinclair refinery in Sinclair Wyoming remains offline following a power outage.  Group Gasoline basis ended unchanged at +$0.2600; Group Diesel basis ended unchanged at +$0.0050.  Chicago Gasoline basis settled $0.1500 lower to +$0.7000; Chicago Diesel ended $0.1050 higher to -$0.0450.

 

NYMEX implied Refiner margins ended lower with Refined Products falling further than Crude Oil.  The November Gasoline Crack ended $1.56/bbl lower to $19.68/bbl; the November Diesel Crack ended $0.84/bbl lower to $57.17/bbl.

 

Overnight:  Energy futures are mixed with a bearish bias this morning on the overnight electronic session.  As of 05:10 in the spot months; (Nov) WTI Crude Oil is $0.35 higher to $81.58; (Nov) Brent Crude Oil is $0.63 higher to $89.12; (Oct) Diesel $0.0624 lower to $3.3522; (Oct) RBOB $0.0201 lower to $2.4875; (Nov) Natural Gas is up 88 to $6.9620.

 

Short Term:  Despite several supportive headlines this week the energy complex continues to move in rollercoaster fashion.  The main influence is the economy, which appears to be headed to recession if not already there.  The Bank of England stimulus program worked great for a day, but the DOW plummeted lower yesterday and is called to open lower this morning.  The Fed indicated they plan of additional and significant increases in benchmark interest rates between now and the first of the year.  OPEC+ threats of a 1.0-mbpd production cut in November isn’t all that supportive since the group is about that far under the current quota anyway.  Today is expiration for October Refined Product futures, which will likely provide downside influence on long liquidation. The energy complex looks to continue with volatile moves in either direction, but fundamentals should provide overall support. End-users should absolutely get covered with Maximum Price contracts to keep a ceiling on rising prices while taking advantage of short-term dips.  Russian threats of war and holding back supply to Europe are very real.  Denver supply shortages are going to be at play with reduced shipments from the Group due to midcontinent refinery problems.

 

Natural Gas:  Futures pulled back slightly as bearish inventory data offset Hurricane Ian concerns.  The EIA reported previous week injection was 103-bcf, which put total stocks just short of the 3.0-tcf thought to be adequate to meet normal winter heating demand at 2.977-tcf.  The large injection lowered the year-on-year deficit to 180-bcf and the deficit to the five-year average was reduced to 306-bcf from 332-bcf the previous week.  Weekly inventory data are summarized below.  

Natural Gas

 

 

 

 

 

EIA Weekly Inventory

9/23/2022

9/16/2022

Change

Year Ago

5-Year Avg

Region

 

 

 

 

 

East

                721

                690

               31

                775

                 807

Midwest

                879

                844

               35

                930

                 937

Mountain

                176

                168

                 8

                200

                 203

Pacific

                243

                237

                 6

                243

                 283

South Central

                958

                935

               23

             1,010

              1,052

Total

             2,977

             2,874

              103

             3,157

              3,283

 

Propane:  Cash Propane prices moved higher despite everything else in the complex moving lower on “bargain buying”.  Conway ended $0.0100 higher to $0.8950; Mt Belvieu ended $0.0100 higher to $0.8975.  On Wednesday the EIA reported Propane stocks increased 1.6 million barrels last week, though that was short of the 2.4-million-barrel expectation.  Production was up 73,000-bpd, yet that was offset by a 285,000-bpd increase in exports.  Weekly demand was up 66,000-bpd to the previous week yet 184,000-bpd below the same week last year.  Total stocks at 82.8 million barrels are 2% below the five-year average.  The year-on-year surplus slipped to 9.9 million barrels

 

“The risk of loss trading futures can be substantial.  Each investor must consider whether this is a suitable investment. This report is for informational purposes only and is not to be construed as an offer to sell or a solicitation to buy the commodities or securities herein named.  The information in this report has been obtained from sources believed to be dependable but is not necessarily all-inclusive and is not guaranteed as to its accuracy.  Unless otherwise stated any quotes provided by Hill Petroleum does not include commissions or bid/ask spreads. Any opinions expressed in this report are those of the author. Individual employees of Hill Petroleum may express different or contrary opinions.  The above recommendations may or may not be followed by Hill Petroleum or its employees."