Crude books weekly gain as US stocks draw 8.56 million barrels, WTI leads Brent
West Texas Intermediate closed the week at $97.40 and ran ahead of Brent, which held above $100 at $105.48. The split came from the EIA number: a US crude draw of 8.56 million barrels for the week to October 9. When domestic stocks come down that hard, the gain shows up at the rack, and jobbers buying this week are paying for it.
The reasons behind the move are stacked up and none of them are getting cheaper. Iranian strikes on tankers in the Strait of Hormuz are still going, Russian refineries keep getting hit, and there's fresh talk of sanctioned oil moving again on previously blacklisted vessels. Brent held its gain but couldn't add to the risk premium. WTI got the stronger bid because the draw was ours.
Ryazan hit again
Ukraine put drones into the Rosneft refinery at Ryazan overnight, one of Russia's largest, and it burned all night. Russia says it knocked down 644 drones. The reason this lands on a US c-store P&L is diesel. Every barrel of Russian distillate that doesn't get made tightens the global diesel pool, and that flows into US ULSD basis.
Trump called the strikes a "disgrace" on Newsmax. "All he's doing is making the world oil price higher," he said of Zelenskiy, singling out diesel refineries as the wrong target. Whatever you think of the politics, he's right on the mechanics. Hitting crude distillation capacity takes diesel out of the market, and diesel is already the tight barrel heading into winter.
Propane going into winter
US propane stocks posted a second straight draw, led by a 1.9 million barrel decline on the Gulf Coast. Total inventory is still 14% above the five-year average, which sounds comfortable until you see where it is. The entire surplus is in PADD 3. Midwest stocks have already slipped below the five-year average with the heating season starting.
Retailers in the middle of the country should watch pre-buy and supply contracts closely. The cushion is on the coast, not where the cold is.
Ethanol
Fuel ethanol production rose 1% to 1.065 million bpd for the week to October 9, up 12,000 bpd. Stocks ticked up to 23.942 million barrels. Exports fell 27%, which is the number blenders should note: more of that barrel stays home, which keeps the blending economics soft for now.
What to watch
OPEC met on the sidelines of the Saudi conference, and nothing on output has come out of it yet. If the strait stays open and no new barrels get pulled, crude could ease off the week's highs. If Ukraine keeps hitting refineries, the diesel crack may stay wide regardless of what crude does.