Outlook: Energy markets have moved higher this morning after trading mixed earlier in the day. Crude and products are now all trading above even. Providing support is the news that the U.K. will become the first country to authorize the Pfizer/BioNTech vaccine for emergency use. The vaccine will be rolled out in the country by next week. Front line health care workers and the elderly will be the first to receive the vaccine. Emergency use approval is still under review by the FDA in the U.S. BioNTech said today that the delivery of 40 million doses to the U.K. will occur throughout 2020 and 2021, but being as the Pfizer/BioNTech vaccine requires 2 doses, 40 million doses will be enough to vaccinate about one third of the 66 million people living in the U.K. Yesterday afternoon an industry group released their weekly inventory report and showed that U.S. crude inventories rose 4.15 million barrels in the week ending November 27. They also reported that gasoline inventories rose 3.4 million barrels, while distillate stocks rose 330,000 barrels. The more relied upon Weekly Petroleum Status Report from the EIA will be released this morning at 9:30am CST. Equities are weaker to start the day as a worse than anticipated private payroll report from ADP has pressured markets lower. ADP reported that private payrolls grew at their slowest pace since July. Companies hired 307,000 workers in November, well below the 475,000 estimate from a survey of economists by Dow Jones.
Crude
- Shell has started the permanent shutdown process for their Convent, Louisiana refinery. The company stated in early November that the plant would be permanently shutdown after failing to find a buyer. The refinery is capable of producing just over 211,000 bpd.
- Russian oil and gas condensate output in November exceeded 10 million bpd, surpassing the mark for the first time since April, according to data from Reuters. Russia’s quota under the OPEC+ agreement is at about 9 million bpd of crude oil, to which they are about 96% compliant with. The OPEC+ quota excludes condensate however.
- India is looking to resume purchasing crude from Iran and Venezuela after President-elect Joe Biden takes office in January, according to Indian Oil Minister Dharmendra Pradhan. India was Iran’s second largest crude importer but stopped buying from the country due to strict sanctions imposed by the Trump administration. President-elect Biden has said that he wants to offer Iran a path back to diplomacy by re-entering the nuclear accord that was achieved under the Obama administration.
- The Reuters poll of analysts and traders is estimating that the EIA will report a 2.358 million barrel draw in U.S. crude stocks for the week ending November 27.
- The January crude contract is trading $0.32 higher at $44.87. The 20-day and 100-day moving averages are $42.27 and $41.52, respectively. The 14-day RSI is 62.95%.
- As of 9:17 am CST: February Brent is up $0.27 at $47.69, the U.S. dollar index is down 0.128 trading at 91.185 pts, while the nearby e-mini S&P 500 futures contract is down 9.25 points at 3,651.25.
Diesel
- January ULSD is up $0.0073, trading at $1.3546. The 20-day and 100-day moving averages are $1.2789 and $1.2437, respectively. The 14-day RSI is 64.93%.
- The Reuters poll of analysts and traders is predicting that the EIA will report a 209,000 barrel draw in U.S. distillate stocks for the week ending November 27.
Gasoline
- January RBOB is trading $0.0122 higher at $1.2326. The 20-day and 100-day moving averages are $1.1777 and $1.1500, respectively. The 14-day RSI is 59.35%.
- The Reuters poll of analysts and traders is estimating that the EIA will report a 2.386 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 $0.0075, trading at $0.5425. Mt. Belvieu was up $0.0075, trading at $0.5750.
- An OPIS survey of analysts and traders is estimating that the EIA will report a 1.2 million barrels draw in U.S. propane stocks for the week ending November 27.
- IHS Markit has called for a 2.366 million barrel draw in propane stocks.
Natural Gas
- January Natural Gas is trading flat at $2.880. The 20-day and 100-day moving averages are $2.946 and $3.167, respectively. The 14-day RSI is 40.07%
- The Weekly Natural Gas Storage Report from the EIA will be released on Thursday morning.
