Outlook: The energy complex has taken a bit of breather this morning as the market awaits a final decision from the FDA. A key FDA advisory panel voted 17-4 yesterday evening in recommending the approval of the Pfizer/BioNTech coronavirus vaccine for emergency use. The FDA is expected to accept the recommendation from the Vaccines and Related Biological Products Advisory Committee, and they could grant the emergency use authorization as early as today. Once the authorization is granted, nearly 3 million doses of the vaccine would be distributed throughout the country within 24 hours by the U.S. government. The FDA has reportedly contacted the U.S. Centers for Disease Control and Prevention, as well as Operation Warp Speed in order to allow them to execute their plans for distributing the vaccine promptly. Vaccine headlines will continue to be the main point of emphasis for market participants. Stimulus negotiations continue to chug along, but little progress is being made. Lawmakers hope to approve a new round of stimulus measures before the end of the year, when members of Congress leave for the holidays. House Majority Leader Steny Hoyer told representatives that the chamber would adjourn until Tuesday. Senate Majority Leader Mitch McConnell informed congressional leaders that Senate Republicans were unlikely to support the $908 billion bipartisan proposal. At this point it seems unclear as to what kind of bill will garner enough support to pass through both chambers of Congress. Enhanced unemployment benefits and rent support measures expire at the end of the year. Rising unemployment as reported by the U.S. Department of Labor yesterday, as well as a new all-time high number of deaths related to Covid-19 should hopefully push lawmakers to come to the table and reach an agreement. Equities have fallen for a third straight day, and are on track for their first weekly loss in three weeks. All three major averages are trading well below even to start the day.
Crude
- Since the beginning of November, WTI crude oil is up around $11.00 per barrel, which equates to over a 30% increase in value.
- Russian Deputy Prime Minister Alexander Novak stated today that the next OPEC+ Joint Ministerial Monitoring Committee meeting has been moved up one day to December 16. The JMMC can make recommendations to the oil ministers, but they do not determine policy.
- European Union countries have secured an agreement on a new climate change target. Leaders of the 27 member states agreed to cut their net greenhouse gas emissions by at least 55% from 1990 levels by 2030, a substantially more aggressive policy than previously agreed upon. The original target was a 40% reduction, according to Reuters. The EU wants to reach net zero emissions by 2050.
- The Trump administration held the first federal drilling auction since 2012 in California yesterday. The auction for drilling rights on seven parcels covering 4,100 acres generated just $46,148.64, according to the auction site EnergyNet. The average price per acre was just $11. Perhaps part of the reason why the land was valued so low was that President-elect Biden has pledged to halt new oil and gas leasing on federal lands when he takes office.
- The January crude contract is trading $0.03 lower at $46.75. The 20-day and 100-day moving averages are $44.34 and $41.83, respectively. The 14-day RSI is 68.05%. An RSI above 70% represents an overbought market from a technical standpoint.
- As of 9:57 am CST: February Brent is down $0.16 at $50.09, the U.S. dollar index is up 0.093 trading at 90.929 pts, while the nearby e-mini S&P 500 futures contract is down 18.75 points at 3,649.75
Diesel
- January ULSD is down $0.0026, trading at $1.4331. The 20-day and 100-day moving averages are $1.3478 and $1.2509, respectively. The 14-day RSI is 72.35%.
- In the latest jobs report from the U.S. Department of Labor, they showed that courier and messenger jobs had reached over 1 million for the first time ever. Significant demand for home delivery, as well as for the movement of goods, has occurred due to the pandemic pushing more and more people towards online shopping. Online shopping this holiday season is expected to be record setting. We should see demand for diesel fuel be relatively strong because of that.
Gasoline
- January RBOB is trading $0.0098 lower at $1.3068. The 20-day and 100-day moving averages are $1.2275 and $1.1605, respectively. The 14-day RSI is 67.93%.
- Road fuel sales in the U.K. have increased nearly 9% as lockdown measures have started to be relaxed. With the U.K. rolling out the Pfizer/BioNTech vaccine recently, demand for gasoline in the country could start to swing back towards a somewhat normal level.
Propane
- Propane prices are moving higher this morning. At last look Conway was up $0.0050, trading at $0.5625. Mt. Belvieu was up $0.0075, trading at $0.6025.
- Current weather forecasts from the NOAA are calling for an elevated probability of warmer than average temperatures for much of the country in both the 6-10 day and 8-14 day forecasts. Precipitation chances remain quite low for much of the country during this time as well. A warm, mild start to the home heating season hasn’t dampened demand for propane, as the EIA reported that propane demand rose 681,000 bpd last week.
Natural Gas
- January Natural Gas is up $0.052 at $2.605. The 20-day and 100-day moving averages are $2.736 and $3.141, respectively. The 14-day RSI is 40.07%.
- Natural gas prices have moved to one-week highs today as record exports continue to provide support. Mild weather is expected to remain into late December. Reuters is predicting that LNG demand, which includes exports, will rise from 118.5 bcfd this week to 121.5 bcfd next week, and 122.0 bcfd in two weeks.
- Yesterday the EIA released its Weekly Natural Gas Storage Report and showed that working gas in storage fell 91 Bcf in the week ending December 4. Natural gas stocks are 260 Bcf above the five-year average.
