Outlook: Energy prices have taken another step back this morning as crude and products trade well below even. Pressuring the market is the announcement from OPEC that the meeting scheduled for today has been postponed until Thursday, December 3. Yesterday it was announced that the 13-member cartel had agreed in principal to extending the current 7.7 million bpd production cut through Q1 of 2021, contingent upon the OPEC+ allies agreeing to it as well. According to Reuters, key players of the group have disagreed on how much crude they should be producing as weak demand and rising coronavirus cases continue to pressure the complex. Over the weekend informal discussion with the Joint Ministerial Monitoring Committee heads were held, but no agreement was achieved. Russia suggested that OPEC+ should start increasing output by 500,000 bpd each month beginning in January. The market will be on pins and needles so to speak until a decision from OPEC+ is reached. Equities have leaped higher this morning as a new stimulus bill and strong Cyber Monday sales were announced. The DJIA rallied 11.8% in November, posting its best one-month performance since January 1987. The Nasdaq Composite and the S&P 500 rose 11.8% and 10.8%, respectively, posting their best month since April.
Crude
- Members of congress have unveiled a new $908 billion stimulus plan. The new plan comes from a bipartisan group of lawmakers that are attempting to break the stalemate that is currently in place. The plan includes $288 billion in the Paycheck Protection Program and $160 billion in funding for enhanced unemployment benefits as well. The proposal does not include direct payments to most individuals. The plan is being called an “interim package” and is aiming to provide support before lawmakers leave Washington for the holidays.
- This afternoon an industry group will release their weekly inventory report. Tomorrow the EIA will release their Weekly Petroleum Status Report. The Reuters poll of analysts and traders is estimating that the EIA will report a 2.272 million barrel draw in U.S. crude stocks for the week ending November 27.
- Iraq’s oil exports fell to 2.709 million bpd in November, according to the Iraqi Oil Minister. Exports in October averaged 2.876 million bpd.
- The Institute for Supply Management’s Manufacturing PMI in November declined to 57.5, down from 59.3 the month prior. Industry expectations called for a measure of 58. The New Orders Index declined to 65.1 from 67.9 in October. The Employment Index fell to 48.4 from 53.2 the month prior. A measure above 50 indicates an expansion, while a reading below 50 indicates a contraction.
- For the month of November: WTI rose $9.13, ULSD increased $0.2768, and RBOB rose $0.2144.
- The January crude contract is trading $0.96 lower at $44.38. The 20-day and 100-day moving averages are $41.94 and $41.48, respectively. The 14-day RSI is 63.38%.
- As of 9:58 am CST: February Brent is down $0.64 at $47.24, the U.S. dollar index is down 0.396 trading at 91.473 pts, while the nearby e-mini S&P 500 futures contract is up 37.75 points at 3,661.00.
Diesel
- January ULSD is down $0.0217, trading at $1.3497. The 20-day and 100-day moving averages are $1.2688 and $1.2432, respectively. The 14-day RSI is 67.35%. An RSI above 70% indicates an overbought market from a technical perspective.
- Holiday shoppers spent $10.8 billion on Cyber Monday, which was up 15.1% from 2019 and sets a new record high for the largest U.S. online shopping day ever, according to data from Adobe Analytics. Despite the new all time high, Adobe had forecast $12.7 billion for Cyber Money spending. Adobe has cut its online sales forecast for the remainder of the holiday season to $184 billion, which would still be a 30% increase from the year prior.
- Heavy demand for online shopping this holiday season should in turn be bullish for diesel demand, as home deliveries and the movement of goods are powered by the fuel.
- The Reuters poll of analysts and traders is predicting that the EIA will report a 310,000 barrel build in U.S. distillate stocks for the week ending November 27.
Gasoline
- January RBOB is trading $0.0249 lower at $1.2167. The 20-day and 100-day moving averages are $1.1701 and $1.1490, respectively. The 14-day RSI is 59.69%.
- Over the Thanksgiving holiday weekend, gasoline demand fell more than 25% when compared to the same time period the year prior. The Wednesday before Thanksgiving gasoline demand was down 38% when compared to the same day in 2019, according to a report from GasBuddy.
- The Reuters poll of analysts and traders is estimating that the EIA will report a 2.575 million barrel build in U.S. gasoline stocks in the week ending November 27.
Propane
- Propane prices are up this morning. At last look Conway was up $0.0025, trading at $0.5450. Mt. Belvieu was up $0.0050, trading at $0.5700.
- The NOAA’s 6-10 day and 8-14 day forecasts are calling for a moderate chance of warmer than average temperatures for much of the northern half of the country. A low probability of precipitation throughout the country is in the forecast as well. Home heat demand for propane does not look like it will see any significant leap higher in the near term.
Natural Gas
- January Natural Gas is trading $0.026 lower at $2.856. The 20-day and 100-day moving averages are $2.961 and $3.166, respectively. The 14-day RSI is 39.83%.
- The Weekly Natural Gas Storage Report from the EIA will be released on Thursday morning.
