OPEC+ to Delay Output Hike?

CRUDE OIL

October Crude Oil is slightly higher this morning as OPEC+ is reportedly close to an agreement to delay an oil output increase that had been scheduled for next month. As of last week they appeared set to move ahead with a planned output hike of 180,000 barrels per day, but the collapse in oil prices this week got in the way. This news is also a tacit admission that the group’s outlook towards global demand, especially from China, was too optimistic, and it suggests that today’s agreement may only provide temporary support. An oil tanker has been approved for entry into Libya’s Zuetina port today or tomorrow to load 600,000 barrels of crude oil from storage, which indicates that that the agreement reached between opposing factions of the government is moving ahead. API crude stocks reportedly fell 7.431 million barrels last week, a much bigger decline than expected. For today’s EIA report, a Reuters survey has traders looking for US crude stocks to be down 1.0 million barrels last week, with gasoline down 700,000 and distillates up 500,000. Refinery runs are expected to drop 0.3% to 93.0%.

PRODUCT MARKETS

No bounce for October RBOB overnight as it was pressing against yesterday’s 14-month low. The market is technically oversold and subject to short covering, and it could see a bounce if today’s EIA data shows a larger than expected draw last week. The API data yesterday showed gasoline stocks fell 336,000 barrels last week versus expectations calling for a decline of 700,000. Look for support at 1.8799, with resistance at 2.0298 and 2.0710. October ULSD was slightly higher overnight after falling to its lowest level since January 2022 yesterday. API distillate stocks fell 406,000 versus an expected increase of 500,000.

NATURAL GAS

October Natural Gas was slightly higher overnight after experiencing a setback from a two-week high yesterday. The NWS 8-10-day forecast shows above average temperatures settling in over much of the nation’s mid-section from the Rockies to the mid-Atlantic region, which could support some cooling demand over the next couple of weeks. For the EIA storage report today week, the Reuters survey shows traders looking for US gas storage to be up anywhere from 20 to 33 bcf last week. US supply is running at a surplus to year ago and the five year average, but the surplus to a year ago and five-year average levels have narrowed significantly since March and could be head to a deficit by early next year.

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