Oil Prices Are Trading Up More Than $1/Barrel So Far Today

Energy futures are moving higher to start Thursday’s session, as traders digest a data deluge with the EIA, IEA and OPEC all publishing their monthly market reports over the past 24 hours, in addition to the weekly inventory reports and CPI estimate. ULSD futures are once again leading the way, up nearly a nickel/gallon, while gasoline prices struggle to keep up adding only a penny so far.

September’s CPI was up .4% on the month and 3.7% on the year, with shelter costs contributing most to inflation, while rising gasoline prices were the 2nd biggest factor. The fact that September’s reading still had gasoline prices increasing, despite the big drop in wholesale values over the past several weeks suggests both that retailers are enjoying a period of huge margins after a tough end to summer, and that next month’s inflation reading is poised to drop substantially. 

Oil prices are trading up more than $1/barrel so far today, despite the API reporting an inventory build of nearly 13 million barrels yesterday. Gasoline stocks were reported to build by 3.6 million barrels, while diesel stocks declined by 3.5 million barrels. The EIA’s weekly report is due out at 10am central today due to the obsolete holiday Monday.

The EIA published its Short Term Energy Outlook Wednesday, which included the agency’s paid-for forecast on winter fuels for the upcoming season. Highlights from this report include a higher price forecast for crude oil, thanks in large part to voluntary production cuts, a note on Jet fuel consumption that’s recovering faster than other products, and a look at how biofuels and other liquids are taking market share from the traditional refined products. The winter outlook forecasts lower spending for most consumers thanks primarily to lower natural gas prices, while the Western US is predicted to see a warmer winter, while the Eastern half of the country is expected to see something colder than last year, which isn’t saying much considering last winter set records for warmth.

OPEC held its forecasts for 2024 steady in its monthly market report, but noted economic activity and non-OPEC oil production are both beating expectations so far this year. The cartel’s output increased by 273mb/day during the month, with most members increasing output. Nigeria had the largest increase at 141mb/day above August levels, marking a 2nd straight month of strong increases Saudi Arabia was a bit of a surprise on the upside, adding 82mb/day for the month as it fine tunes its output to come in right at the 9 million barrel/day mark.    

The IEA was notably more bearish in its monthly outlook than the other two agencies, highlighting the weakness in US gasoline consumption which it said reached a 2-decade low in September. The report did note that rapid demand growth in China is serving to offset some of the destruction in developed countries, which will keep driving global consumption higher. The IEA’s report also noted that Russia’s export revenue is surging with average prices going well above the “cap” levels which seem to be largely ignored at this point.

Flint Hills reported a leak in an FCC unit at their Corpus Christi refinery Wednesday, marking at least the 4th upset from Corpus-area refiners in the past two weeks. So far, these hiccups haven’t had a large impact on the Austin/San Antonio and DFW markets they serve.

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