Outlook: Energy markets have been mixed this morning as the complex awaits a decision from OPEC+. The group is holding a meeting today to determine policy for 2021. OPEC+ originally planned to increase production by nearly 2.0 million bpd starting in January 2021, but as cases of Covid-19 have continued to rise and have crimped global demand, the group is weighing options to help bring equilibrium to the market. Industry expectations are that OPEC+ will delay the production increase for at least 3 months, but Russia, Iraq, Nigeria, and the UAE have all expressed interest in increasing crude supply in 2021. OPEC sources have stated that options now range from a rollover of the existing cuts to an easing of cuts by 500,000 bpd to 1.0 million bpd each month beginning in January, according to a Reuters report. Equities have been given a boost this morning as better than anticipated jobs data was reported by the U.S. Department of Labor. The S&P 500 and the Nasdaq Composite have hit record highs. The Department of Labor will release the jobs report for the month of November tomorrow. Providing some support to energy and equities this morning is the news that House Speaker Nancy Pelosi and Minority Leader Chuck Schumer have backed the $908 billion stimulus plan that was proposed earlier in the week. Lawmakers are rushing to try and get a stimulus bill done before they leave for the holidays at the end of the year. Senate Majority Leader Mitch McConnell has stated this morning that a stimulus compromise is within reach.
Crude
- First time claims for unemployment benefits fell to a pandemic low last week, totaling 712,000 new claims compared to 787,000 the week prior, according to data from the U.S. Department of Labor. Economists polled by Dow Jones anticipated new claims to total 780,000. Continuing claims fell 569,000 to 5.52 million, which is also a pandemic low.
- The U.S. reported a record high of 2,800 deaths from Covid-19 on Wednesday, according to data from Johns Hopkins University. The previous high was just over 2,600 on April 15. The U.S. also reported more than 200,000 new cases of the virus yesterday, the second highest figure recorded. More than 100,000 people are currently hospitalized due to the virus, according to data from the Covid Tracking Project.
- Chevron stated today that they plan to cut billions of dollars from their long-term capital and exploratory budget. The announcement comes after a major restructuring of Chevron’s operations took place due to the collapse in energy prices earlier in the year. The company expects the capital and exploratory budget through 2025 to be between $14 billion and $16 billion, down from an earlier forecast of $19 billion and $22 billion.
- The January crude contract is trading $0.06 higher at $45.34. The 20-day and 100-day moving averages are $42.58 and $41.57, respectively. The 14-day RSI is 63.96%.
- As of 9:51 am CST: February Brent is up $0.18 at $48.43, the U.S. dollar index is down 0.599 trading at 90.519 pts, while the nearby e-mini S&P 500 futures contract is up 11.75 points at 3,679.00
Diesel
- January ULSD is up $0.0129, trading at $1.3791. The 20-day and 100-day moving averages are $1.2889 and $1.2446, respectively. The 14-day RSI is 66.80%.
- Yesterday the EIA reported that distillate inventories rose 3.238 million barrels last week, which was well above industry expectations. They also reported that distillate demand fell 386,000 bpd.
- The Transportation Security Administration reported that 632,356 passengers went through airport security checkpoints yesterday. On December 2 of last year, 2,054,380 people went through airport security, which would indicate a nearly 70% contraction in airline demand when comparing the two figures.
Gasoline
- January RBOB is trading $0.0104 higher at $1.2503. The 20-day and 100-day moving averages are $1.1853 and $1.1513, respectively. The 14-day RSI is 60.99%.
- U.S. ethanol production in the four weeks ending on November 27 averaged 975,750 bpd, which is a nine-month high. Ethanol inventories have risen 8% in the last four weeks as well, increasing to 21.24 million barrels, according to data from the EIA.
- Japan is weighing a ban on the sale of new gasoline powered vehicles by the mid-2030’s, according to a Reuters report.
Propane
- Propane prices are up this morning. At last look Conway was up $0.0075, trading at $0.5525. Mt. Belvieu was up $0.0025, trading at $0.5850.
- Yesterday the EIA reported that U.S. propane inventories fell 845,000 barrels last week, which was somewhat in line with industry expectations. Propane demand fell 161,000 bpd to 1.010 million bpd last week. Warmer weather throughout much of the country has pressured home heating demand for propane.
Natural Gas
- January Natural Gas is down $0.207 at $2.573. The 20-day and 100-day moving averages are $2.910 and $3.162, respectively. The 14-day RSI is 28.72%. An RSI below 30% represents an oversold market from a technical standpoint.
- Natural gas prices have dropped over 7% this morning as forecasts for mild weather are expected to crimp demand.
- The EIA released their Weekly Natural Gas Storage Report this morning and showed that working gas in storage fell 1 Bcf in the week ending November 27. Natural gas stocks are 343 Bcf higher than last year at this time, and 290 Bcf above the five-year average.
