Outlook: Energy prices have taken a step back this morning as the market reassesses current fundamentals. On Monday and Tuesday of next week, the OPEC+ oil ministers will gather virtually for a meeting. It is anticipated that they will extend the current 7.7 million bpd production cut for an additional three months. If the production cut is extended, Goldman Sachs estimates that global crude inventories will draw 1.0 million bpd in the the first quarter of 2021. A panel of OPEC+ members will hold informal online discussions tomorrow, according to a Reuters report. Russian Deputy Prime Minister Alexander Novak will be attending the informal meeting along with the Joint Ministerial Monitoring Committee. The Saudi Energy Minister Prince Abdulaziz bin Salman will also be in attendance. Traders and market analysts will be paying close attention to any news coming out of these meetings, as a confirmation of the supply cut extension will like likely send futures values higher. Equity markets are seeing strength this morning as all three major averages are trading above even.
- According to Chinese Customs data, China has hit 26% of its 2020 target for U.S. energy imports under the Phase One trade deal. Over the first 10 months of 2020, Chinese purchases of U.S. energy products totaled $6.61 billion, or about 26% of the $25.3 billion target. It is extremely unlikely the last 74% of the quota will be reached in November and December, but imports in the second half of 2020 have increased dramatically, up nearly five-fold since the end of June.
- On Wednesday Baker Hughes released their Weekly Rig Count Report and showed that U.S. producers had added 10 oil rigs, bringing the total up to 241. Oil rigs have seen a gradual rise in recent weeks, but are still down 427 when compared to last year at this time.
- The CFTC Commitments of Traders report will be delayed until Monday due to the Thanksgiving Holiday.
- The January crude contract is trading $0.42 lower at $45.29. The 20-day and 100-day moving averages are $41.08 and $41.40, respectively. The 14-day RSI is 66.19%.
- As of 9:51 am CST: January Brent is up $0.17 at $47.97, the U.S. dollar index is down 0.182 trading at 91.812 pts, while the nearby e-mini S&P 500 futures contract is up 14.00 points at 3,641.25.
- December ULSD is down $0.0104, trading at $1.3762. The 20-day and 100-day moving averages are $1.2341 and $1.2271, respectively. The 14-day RSI is 71.19%. An RSI above 70% indicates an overbought market from a technical perspective.
- Distillate inventories have fallen in 12 of the last 13 weeks, bringing total inventories down by 37 million barrels, according to data from the EIA. Distillate stocks are about 9% above the five-year average, down significantly from earlier in the year when stocks were nearly 30% higher than the seasonal average.
- December RBOB is trading $0.0133 lower at $1.2742. The 20-day and 100-day moving averages are $1.1554 and $1.1467, respectively. The 14-day RSI is 66.72%.
- The EIA released their Weekly Petroleum Status Report on Wednesday and showed that gasoline inventories had risen 2.18 million barrels in the week ending November 20. The EIA also reported that gasoline demand had contracted another 129,000 bpd to 8.129 million bpd.
- The EIA reported that U.S. propane inventories fell 324,000 barrels last week. Propane demand fell 299,000 bpd to 1.171 million bpd. Warm weather throughout much of the country has contributed to the demand contraction.
- January Natural Gas is trading $0.105 lower at $2.856. The 20-day and 100-day moving averages are $3.018 and $3.167, respectively. The 14-day RSI is 39.64%.
- Natural gas prices have fallen today due in large part to warmer than average weather and a continued rise in production. Reuters estimates 365 heating degree days over the next two weeks in the lower 48 states, which is slightly below the 30 year average of 378 HDD’s. Natural gas production in the lower 48 states has averaged 90.3 billion cubic feet per day so far in November, up nearly 3.0 bcfd when compared to the month prior.
Holiday Hours: Markets will halt at 12:45pm today.