MARKETWIRE ALERTS
Maria Eugenia Garcia
DTN Energy Editor
MARKETWIRE ALERTSMarketWire Afternoon News October 26:Updated at 5:15 PM ETHEADLINES:Dallas Fed: Texas Manufacturing Expands in OctoberMixed Signals on Middle East
Conflict Weigh on Oil PricesWTI, Brent Crude Fall on Mideast Diplomatic
TalksCFTC: WTI Net Longs Drop to Fresh Two-Month LowDOE Authorizes 400,000 Bbl
SPR Exchange for Phillips 66 News:
Dallas Fed: Texas Manufacturing Expands in October
Texas manufacturing activity continued to expand in October, although output
growth moderated as new orders, shipments and capacity utilization slowed.
The production index in the second-largest U.S. state fell 14 points to 15.8
this month but remained above its series average, signaling a slower yet still
solid pace of expansion.
Broader business conditions improved, with the general business activity
index rising to 13.4 from 9.8, while the company outlook index increased seven
points to 16.1. Outlook uncertainty eased three points to 7.9.
Capacity utilization fell 10 points to 13.7, while the shipments index
declined 16 points to 8.4. New orders slowed sharply, with the index falling to
9.3 from 30.7.
Price pressures edged higher, with the finished goods prices index rising to
29.9 from 27.6 and the raw materials prices index climbing three points to
55.3, well above its series average of 28.1. Wage pressures eased, however, as
the wages and benefits index fell seven points to 20.8.
The employment index declined to 11.6 from 15.1, indicating slower hiring
growth, while the hours worked index rose five points to 10.1, signaling
stronger growth in work hours.
Manufacturers remained optimistic about the coming months, with the future
production index little changed at 39.4, pointing to expectations for continued
growth in manufacturing activity over the next six months.
Mixed Signals on Middle East Conflict Weigh on Oil Prices
Oil crude futures droppedl on Monday (10/26) as market participants weighed
mixed signals on the Middle East conflict, including reports of diplomatic
efforts by senior officials from Saudi Araby, Pakistan and Turkey who met with
Iran to seek peace, while U.S. President Donald Trump threatened to renew
attacks on Iran.
According to media reports, the newly-formed Mecca Alliance, comprising
Saudi Arabia, Pakistani and Turkish, met with Iranian officials on Monday, with
the parties agreeing to continue talks aimed at preventing further escalation
of tensions in the Middle East.
However, U.S. president Donald Trump on Sunday (10/26) said that he was
still deciding whether to pursue an agreement with Iran or take action to
"finish them off."
The front-month ICE Brent dropped $1.90 to $115.947 bbl, while the NYMEX WTI
futures contract for December delivery fell $1.44 to $101.82 bbl.
Downstream, ultra-low sulfur diesel (ULSD) futures reversed gains recorded
in the morning and the front-month NYMEX ULSD settled at $4.9120 gallon, down
$0.0789 from Friday (10/23), after hitting a session high of $5.0438.
In contrast, the NYMEX RBOB futures for December delivery increased $0.0369
to $3.2485 gallon.
The U.S. dollar index strengthened 0.187 points to 101.84 against a basket
of foreign currencies.
This week, traders will closely monitor Federal Reserve Open Committee
meeting scheduled for October 28. The Federal Reserve raised U.S. interest
rates by 25 basis points in September, bringing key U.S. lending rates to a
3.75%- 4% range.
It was the first monetary tightening in three years by the central bank,
with analysts expecting it to hike rates further in the near term as it tries
to combat rising inflation. The Fed's next rate decision will be in December.
WTI, Brent Crude Fall on Mideast Diplomatic Talks
Oil crude futures fell on Monday (10/26) morning as Saudi, Pakistani and
Turkish officials prepared to meet in Tehran for talks aimed at preventing a
further escalation of tensions in the Middle East.
The diplomatic efforts followed comments from U.S. president Donald Trump on
Sunday (10/26) that he was still deciding whether to pursue an agreement with
Iran or tak action to "finish them off."
Eight months into the Iran-Israel-U.S. conflict, vessel traffic through the
Strait of Hormuz remained highly constrained, with just eight vessels
transiting the key waterway in the last 24 hours, compared with an average
daily rate of nearly 60 vessels, according to vessel tracking data.
The front-month ICE Brent dropped $1.90 to $115.947 bbl, while the NYMEX WTI
futures contract for December delivery fell $1.44 to $101.82 bbl.
In contrast, the NYMEX ULSD futures contract for November delivery rose
$0.0130 to $4.9972 gallon, while front-month NYMEX RBOB futures increased g
$0.0369 to $3.2485 gallon.
The US dollar index climbed 0.222 points to 101.87 against a basket of
foreign currencies.
In domestic developments, the U.S. Department of Energy (DOE) authorized an
emergency exchange of up to 400,000 bbl of crude oil from the Strategic
Petroleum Reserve (SPR) to support operations at Phillips 66's 264,000-bpd Lake
Charles refinery in Louisiana following a disruption to crude oil deliveries.
The DOE said Friday (10/23) that the crude will be released from its West
Hackberry SPR site in Louisiana for immediate delivery, helping the refinery
maintain production of gasoline, diesel and other transportation fuels serving
regional markets.
U.S. refineries have been running at high utilization rates and postponing
winter to meet strong refined-product demand, particularly for diesel, as
exports demand has been prioritized over domestic supplies. The U.S. Energy
Information Administration reported last week that U.S. refinery utilization
rose to 93.4% during the week ended October 16, up from 88.6% recorded the same
week last year.
CFTC: WTI Net Longs Drop to Fresh Two-Month Low
Money managers reduced their net bullish positioning in NYMEX West Texas
Intermediate (WTI) crude during the week ended October 20, pushing net longs to
a fresh two-month low as a reduction in long positions combined with an
increase in shorts.
Noncommercial long positions in WTI held by money managers fell by 9,541
contracts to 335,112 during the reference week, according to weekly Commitment
of Traders data released Friday (10/23) by the Commodity Futures Trading
Commission (CFTC).
Noncommercial short positions increased by 1,477 contracts to 245,787 during
the same week, the CFTC data showed.
This caused the net noncommercial long position in WTI to fall by 11,018
contracts to 89,325, reversing the previous week's modest increase of 1,283
contracts. Open interest, meanwhile, declined by 65,035 contracts to 1,835,144.
The latest reduction brought net bullish positioning below 90,000 contracts
for the first time in at least two months, extending the broader decline from
141,106 contracts reported for the week ended September 22.
Noncommercial spread positions in WTI fell by 13,675 contracts to 533,083
during the same week.
Total long positions in WTI futures declined by 60,932 contracts to
1,759,108, while total short positions fell by 59,091 contracts to 1,785,941.
DOE Authorizes 400,000 Bbl SPR Exchange for Phillips 66
The U.S. Department of Energy (DOE) authorized an emergency exchange of up
to 400,000 bbl of crude oil from the Strategic Petroleum Reserve (SPR) to
support operations at Phillips 66's 264,000-bpd Lake Charles refinery in
Louisiana following a disruption to crude oil deliveries.
The DOE announced Friday (10/23) that the crude will be supplied from its
West Hackberry SPR site in Louisiana for immediate delivery, helping the
refinery maintain production of gasoline, diesel and other transportation fuels
serving regional markets.
The agency did not identify the cause of the crude supply interruption or
disclose whether refinery throughput had been affected.
Under the agreement, Phillips 66 must return the borrowed crude oil along
with additional premium barrels, replenishing the SPR with more oil than was
withdrawn.
Located in Westlake, Louisiana, the refinery has a gasoline production
capacity of 105,000 bpd and distillate production capacity of 115,000 bpd,
according to Phillips 66. Its refined products are distributed primarily across
the southeastern and eastern United States, with additional exports to Latin
America and Europe.
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