Market Comments: Energy products have eased higher.
Wednesday morning, energy markets were flipping between gains and losses as China's central bank announced an economic stimulus agenda of $140 billion, which was sparking elevated market moves. Ongoing geopolitical influence came from vessel movement in and around the Red Sea. Also providing a bump to prices is API data revealed yesterday afternoon, showing a drop of over 6 million barrels to crude inventories. The sliding value of the U.S. dollar is playing a part in rising petroleum prices as products become more attractive to foreign investors.

To the downside, Libya's renewed flow of 300,000 bpd of crude was pressuring futures lower. Also, moderating upward movement of energy markets is questionable global economic progress as traders try to sort out when the FED could make its first interest rate cut as the country attempts to bounce back from historically high inflation.
EIA weekly highlights
  • Propane stocks collapsed 8.4 million barrels!
  • Crude inventories plunged 9.2 million barrels
  • Gasoline stocks gained nearly 5 million barrels, disillates drew 1.4 million barrels
Denser U.S. crude grades on the rise

The U.S. crude production growth chart below shows how and why the domestic oil industry achieved record output levels while the Middle East scaled back market offerings.
  • Weekly U.S. crude output reached a record high of 13.2 million barrels per day the first week of October 2023.

  • Most crude produced in the lower 48 states (excluding Alaska) in the past comprised lighter / less dense grades.

  • The U.S. has relied on imports of heavier crude to meet the needs of domestic refiners using a mix of sweeter grades (lighter) and sour grades (heavier).

  • The jump in production last year was mainly due to the emergence of heavier-grade oil in the Permian region of Texas and New Mexico.

  • Most imported volumes of sour crude in the U.S. come from Canada, but a shift in growth to more dense oil in this country means there is less reliance on foreign suppliers.

  • The U.S. should also beneift from more sour grade in the market as it tends to be a cheaper product to refine, allowing producers to capitalize more on their investment, which could trigger additional backing of U.S. output going forward.
India's growth consumption influence

Despite much of the world's energy consumption being flat or down for the past 1+ year, India has bucked that narrative as demand for petroleum products in the region continues to expand.
  • The rapid expansion of the middle class, urbanization, and industrialization in the region are driving demand in India.

  • India, the world's second most significant contributor to energy consumption growth globally, is persisting towards the top spot.

  • China's lagging demand post-COVID continues to weigh on consumption forecasts for the region into the next decade.

  • More adoption of EVs and slowing economic growth in China means more tempered economic movement.

  • The latest projections show India will surpass China as the leader in expanding world energy demand before 2030.

  • Beyond 2030, forecasts anticipate India's strong growth of internal combustion engines (ICE), while China is expected to cool on ICE vehicles, leading to India's growing influence in world energy markets.
RECOMMENDATIONS:
12/7/2023: Contract 10% of your spring and fall diesel needs bringing the total to 20% for each timeframe.
12/7/2023: Contract 10% of your summer gasoline needs bringing the total to 20%.
12/7/2023: Fill diesel tanks for you and your customers.
11/16/2023: Contract 10% of your fall/winter 24/25 propane needs.
10/4/2023: Contract 10% of your spring/fall diesel needs.
10/4/2023: Contract 10% of your summer gasoline needs.
The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by MID-CO COMMODITIES, INC. or GROWMARK, Inc. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

We require all contracts, futures, and/or option orders be called into our office.

Bridget Chinowth/Melissa Grant/Brian Keith/Eugene McGillian
Jeff O’Brian/Jacqueline Witte/Scott Wilson

Energy Risk Management MID-CO COMMODITIES, INC   
Energy Risk Management
800-550-4820

Bridget Chinowth
309-557-6301
Melissa Grant
309-557-6080
Brian Keith
309-557-6304
Eugene McGillian
309-557-6388
Jeff O’Brian
309-557-6335
Jacqueline Witte
309-557-6313
Scott Wilson
309-557-6435
Energy Customer Care
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