Outlook: The energy complex has shifted higher once again as market optimism surrounding the next coronavirus stimulus bill has buoyed prices this morning. Lawmakers on Capitol Hill say that they are close to an agreement on a $900 billion stimulus bill. Energy markets are taking the stimulus developments in stride, as crude and products are all well above even. Lawmakers are also working on a government funding bill. Without a new bill, funding will lapse on Saturday. Senate Majority Leader Mitch McConnell has said that Congress will not leave for the holidays until it passes more assistance. If no new stimulus bill were to be passed, around 12 million people would lose unemployment benefits the day after Christmas. An FDA advisory panel is scheduled to vote today on whether to recommend Moderna’s Covid-19 vaccine for emergency use. The FDA’s Vaccine and Related Biological Products Advisory Committee is likely to provide a favorable vote, setting up the authorization from the FDA by as early as Friday. The U.S. government can ship about 6 million doses of the vaccine once the FDA approval is received. Despite the stimulus optimism and the prospects for Moderna’s Covid-19 vaccine being given an emergency authorization, the U.S. jobs market is showing signs of worsening. Worse than anticipated jobs data from the U.S. Department of Labor was reported this morning. Equities haven’t seemed to care however, as all three major averages are trading well above even.
Crude
- This morning the U.S. Department of Labor released its weekly jobs report and showed that first time claims for unemployment totaled 885,000 in the week ending December 12. That is the highest weekly total since September 5. Economists polled by Dow Jones anticipated 808,000 first time claims. Over 20 million U.S. citizens were receiving some form of unemployment benefit through November 28, according to the report.
- Saudi Arabia’s crude oil exports rose for a fourth straight month, increasing to 6.16 million bpd in October. That was up from September’s 6.07 million bpd.
- President-elect Joe Biden has announced that Jennifer Granholm will be nominated to lead the U.S. Department of Energy. Granholm is the former Governor of Michigan and will be tasked with helping the U.S. auto industry compete with China on electric vehicle production.
- The January crude contract is trading $0.36 higher at $48.18. The 20-day and 100-day moving averages are $45.58 and $42.05, respectively. The 14-day RSI is 72.34%.
- As of 10:15 am CST: February Brent is up $0.32 at $51.40, the U.S. dollar index is 0.568 lower to 89.882, while the nearby e-mini S&P 500 futures contract is up 15.50 points at 3,716.25.
Diesel
- January ULSD is up $0.0139, trading at $1.4918. The 20-day and 100-day moving averages are $1.3936 and $1.2572, respectively. The 14-day RSI is 78.25%. An RSI above 70% indicates an overbought market from a technical standpoint.
- According to EIA data, jet fuel consumption was down nearly 50% during the week of Thanksgiving this year when compared to the year prior.
- Analysts at JPMorgan expect air travel demand to considerably increase next year due to pent-up demand. They estimate that by 2022 airline demand will be near pre-pandemic levels.
- Yesterday morning the EIA reported that distillate demand rose 613,000 bpd to 4.002 million bpd.
Gasoline
- January RBOB is trading $0.0179 higher at $1.3708. The 20-day and 100-day moving averages are $1.2665 and $1.1687, respectively. The 14-day RSI is 74.34%.
- During the week of Thanksgiving 2020, demand for major transportation fuels such as gasoline, diesel, and jet fuel was about 11% lower than during the same time period in 2019.
- Yesterday morning the EIA reported that gasoline demand rose 375,000 bpd to 7.975 million bpd, the first weekly increase since the week ending November 6.
Propane
- Propane prices are moving higher morning. At last look Conway was up $0.0875, trading at $0.6550. Mt. Belvieu was up $0.0700, trading at $0.6725. The large draw in propane inventories along with strong demand from Asia, cooler weather, and crude pushing higher have all contributed to the large uptick in propane prices this morning.
- Yesterday the EIA reported that U.S. propane inventories fell 3.710 million barrels in the week ending December 11, which was a much larger draw than anticipated. High exports along with mostly steady demand helped push inventories lower.
Natural Gas
- January Natural Gas is down $0.064 at $2.613. The 20-day and 100-day moving averages are $2.685 and $3.131, respectively. The 14-day RSI is 42.12%.
- The Weekly Natural Gas Storage Report from the EIA was released this morning. They showed that working gas in storage fell 122 Bcf in the week ending December 11. Natural gas stocks are 284 Bcf higher than last year at this time, and 243 Bcf above the five-year average.
- Prices have dipped following the EIA report, as the reported draw was near industry expectations.
