Outlook: The energy complex has been somewhat mixed this morning as the market awaits data from the EIA. Crude and ULSD have been down most of the morning, while RBOB has traded both sides of even. Pressuring energy and equity markets this morning is a monthly report from the U.S. Department of Commerce which showed that retail sales dropped 1.1% last month. Data was revised for October and showed a drop of 0.1% as well. Rising Covid-19 infections and tighter restrictions likely played a large part in the steeper than anticipated decline. On the stimulus front, Congress is reportedly getting close to a $900 billion bill that could be announced as early as today. Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer spent Tuesday evening negotiating the bill, with both sides saying they hoped to have an agreement soon. The new bill would contain direct payments to individuals, which could come out to around $600 per person. Direct payments hadn’t been apart of any of the previous bipartisan plans. Funding for small businesses would amount to about $300 billion. Lawmakers have been pushing to get a deal done before leaving for the holidays. Despite the rosier outlook for a stimulus bill, and the possibility that the FDA will grant an emergency use authorization for Moderna’s coronavirus vaccine as early as tomorrow, equities have been mixed and choppy this morning, as all three major averages have traded both sides of even.
Crude
- The Reuters poll of analysts and traders is estimating that the EIA will report a 1.937 million barrel draw in U.S. crude stocks for the week ending December 11. Yesterday afternoon an industry group reported that U.S. crude stocks rose by 2.0 million barrels last week.
- Saudi Aramco may have to sell assets and borrow more money in order fulfill its dividend obligations. The company is sticking to the promised $75 billion annual dividend despite profits falling dramatically this year due in large part to the pandemic. Saudi Aramco needs oil to be $50 per barrel or above to be able to fund the $75 billion dividend.
- Investments by oil and gas companies in Norway are anticipated to fall by 4.2% in 2021, down to $20.5 billion. Norway produces about 4 million barrels of crude and petroleum products each day.
- The January crude contract is trading $0.41 lower at $47.21. The 20-day and 100-day moving averages are $45.24 and $41.98, respectively. The 14-day RSI is 67.78%.
- As of 9:14 am CST: February Brent is down $0.17 at $50.59, the U.S. dollar index is down 0.185 trading at 90.288 pts, while the nearby e-mini S&P 500 futures contract is up 0.75 points at 3,695.25
Diesel
- January ULSD is down $0.0105, trading at $1.4539. The 20-day and 100-day moving averages are $1.3813 and $1.2551, respectively. The 14-day RSI is 72.55%. An RSI above 70% indicates an overbought market from a technical standpoint.
- The Reuters poll of analysts and traders is estimating that the EIA will report a 886,000 barrel build in U.S. distillate stocks for the week ending December 11. Yesterday afternoon an industry group reported that U.S. distillate stocks rose by 4.8 million barrels last week.
Gasoline
- January RBOB is trading $0.0005 lower at $1.3263. The 20-day and 100-day moving averages are $1.2547 and $1.1661, respectively. The 14-day RSI is 69.26%.
- The Reuters poll of analysts and traders is predicting that the EIA will report a 1.614 million barrel build in U.S. gasoline stocks for the week ending December 11. Yesterday afternoon an industry group reported that U.S. gasoline inventories rose 828,000 barrels last week.
Propane
- Propane prices are moving higher morning. At last look Conway was up $0.0075, trading at $0.5850. Mt. Belvieu was up $0.0125, trading at $0.6250.
- The OPIS survey of analysts and traders is calling for the EIA to report a draw of 2.02 million barrels in U.S. propane stocks for the week ending December 11.
- IHS Markit is estimating a draw of 2.379 million barrels.
Natural Gas
- January Natural Gas is down $0.014 at $2.668. The 20-day and 100-day moving averages are $2.695 and $3.134, respectively. The 14-day RSI is 44.01%.
- Mild weather in the forecast has pressured natural gas futures slightly lower this morning. Record high exports should provide some level of support for natural gas prices however.
- The northeast is expected to get slammed by a winter storm today and tomorrow, which has pushed power and gas prices in the region to their highest level in almost a year, according to Reuters.
- The Weekly Natural Gas Storage Report from the EIA will be released on Thursday morning.
