Outlook: Energy markets have continued to climb higher this morning as crude and products are all well above even once again. Crude oil prices are reaching the highest levels since March, just before the pandemic hit. A weakening dollar as well as positive news from AstraZeneca regarding their coronavirus vaccine has given a boost to energy prices for most of the week. That along with the clarity surrounding the Presidential election has provided support to both the energy and equity sectors. Earlier this week the Trump administration advised the General Services Administration to begin the transition process to President-elect Joe Biden. Yesterday afternoon an industry group released their weekly inventory report and showed that U.S. crude stocks rose by 3.8 million barrels last week. The Reuters poll of analysts and traders is estimating that crude inventories rose 127,000 barrels in the week ending November 20. Equities have taken a breather today after the DJIA closed above 30,000 for the first time ever yesterday. Despite the rosier outlook, weak jobs data from the Department of Labor has pressured the DJIA and the S&P into negative territory, while the Nasdaq Composite trades just above even.
Crude
- This morning the U.S. Department of Labor reported that weekly jobless claims totaled 778,000 last week. Economists polled by Dow Jones anticipated 733,000 first time claims. Last week 742,000 first time claims were filed. For a month straight claims had been falling, now we’re seeing a reversal of that trend as first time claims are climbing once again.
- An estimated 6.4 million doses of Pfizer’s vaccine will be distributed to states by mid-December, assuming that it receives FDA authorization, according to Operation Warp Speed officials. Health and Human Services Secretary Alex Azar stated yesterday that the department is working on recommendations for prioritization. Front line health care workers, people in nursing homes, and other people with a compromised immune system are likely to receive the vaccine first.
- Exxon has lowered its expectations for oil prices for most of the next decade, according to a Wall Street Journal report. Exxon has reportedly cut its price outlook for future crude prices for the next seven years by 11% - 17%.
- China’s crude oil imports from both Russia and Saudi Arabia were down significantly in October. Inflows from Russia averaged 1.56 million bpd in October, compared with 1.82 million bpd in September. Saudi Arabia supplied 1.4 million bpd in October, down 29% when compared to October 2019.
- The January crude contract is trading $0.29 higher at $45.20. The 20-day and 100-day moving averages are $40.63 and $41.36, respectively. The 14-day RSI is 68.45%.
- As of 9:08 am CST: January Brent is up $0.30 at $48.16, the U.S. dollar index is down 0.159 trading at 92.067 pts, while the nearby e-mini S&P 500 futures contract is down 11.25 points at 3,621.50
Diesel
- December ULSD is up $0.0135, trading at $1.3730. The 20-day and 100-day moving averages are $1.2195 and $1.2262, respectively. The 14-day RSI is 73.70%. An RSI above 70% indicates an overbought market from a technical perspective.
- The Reuters poll of analysts and traders is predicting that the EIA will report a 1.586 million barrel draw in U.S. distillate stocks for the week ending November 20. Yesterday an industry group reported that distillate inventories fell 1.8 million barrels last week.
Gasoline
- December RBOB is trading $0.0045 higher at $1.2627. The 20-day and 100-day moving averages are $1.1422 and $1.1452, respectively. The 14-day RSI is 67.69%.
- The Reuters poll of analysts and traders is estimating that the EIA will report a 614,000 barrel build in U.S. gasoline stocks for the week ending November 20. Yesterday an industry group reported that gasoline inventories rose 1.3 million barrels last week.
Propane
- Propane markets are following crude higher this morning. At last look Conway was trading $0.0100 higher at $0.5300. Mt. Belvieu was up $0.0125, trading at $0.5500.
- An OPIS survey of analysts and traders is predicting that the EIA will report a 1.6 million barrel draw in U.S. propane inventories for the week ending November 20.
- IHS Markit is estimating that the EIA will report a 2.033 million barrel draw.
Natural Gas
- December Natural Gas is trading $0.010 lower at $2.765. The 20-day and 100-day moving averages are $2.911 and $3.043, respectively. The 14-day RSI is 39.87%.
- The Weekly Natural Gas Storage Report from the EIA will be released today due to the Thanksgiving Holiday.
Holiday Hours: Wednesday will be normal trading hours. Thursday energy markets will halt at noon. CHS Hedging will not be staffed on Thursday due to the Thanksgiving Holiday. Energy markets will re-open at 5:00pm on Thursday evening. Friday markets will halt at 12:45pm.
