Outlook: Energy markets have rebounded this morning as a weaker dollar and strength in equities have helped boost prices. A weak U.S. dollar makes dollar-denominated commodities cheaper to those that hold different currencies. A drop in the dollar typically corresponds with a positive price move in WTI. Supply disruptions in Nigeria have also brought some support to the market this morning. ExxonMobil issued force majeure on the Qua Iboe crude oil export terminal last week due to a fire at the facility. Operations at the terminal are expected to resume in January. Nigeria is a member of OPEC and is the largest exporter of crude oil in Africa. Better than anticipated jobs data has also lent support to energy and equity markets this morning. Jobless claims rose less than anticipated, as the number of first-time claims for unemployment insurance fell to 803,000 last week, according to data from the U.S. Department of Labor. Economists polled by Dow Jones anticipated initial claims to rise to 888,000. Initial claims for the week prior were revised higher to 892,000. Continuing claims, which requires claims to be filed for at least two weeks in a row, fell to 5.3 million. Yesterday evening President Trump called the recently passed coronavirus stimulus bill unsuitable, and urged Congress to adjust the direct payments to taxpayers to $2,000 instead of $600. President Trump did not threaten to veto the bill, and is expected to sign the legislation into law soon. Equities have been mostly positive this morning, as the DJIA and the S&P 500 are both well over even, while the Nasdaq Composite has traded both sides.
Crude
- Pfizer will supply the U.S. with 100 million additional doses of its Covid-19 vaccine by July 2021, according to a report from CNBC. Pfizer and BioNTech will deliver at least 70 million doses by June 30, and another 30 million by no later than July 31. The adjusted agreement brings the total number of doses to the U.S. from Pfizer/BioNTech to 200 million. The Pfizer/BioNTech vaccine requires 2 doses. Moderna has been granted an FDA emergency use authorization, while AstraZeneca and Johnson & Johnson have not progressed to that point. Vaccine headlines will continue to dominate market sentiment for the foreseeable future.
- Yesterday afternoon an industry group released its Weekly Inventory Report. They showed that U.S. crude oil stocks rose 2.7 million barrels last week. This morning the EIA will release the Weekly Petroleum Status Report. The Reuters poll of analysts and traders is anticipating that the EIA will report a 3.186 million barrel draw in U.S. crude oil stocks for the week ending December 18.
- The Baker Hughes Rig Count Report will be released today instead of Friday due to the holiday. Last week U.S. producers added 5 oil rigs, bringing the total to 263. Oil rig counts are still down 422 when compared to the year prior.
- The February crude contract is trading $0.80 higher at $47.82. The 20-day and 100-day moving averages are $46.71 and $42.59, respectively. The 14-day RSI is 61.00%.
- As of 9:04 am CST: February Brent is up $0.50 at $50.58, the U.S. dollar index is 0.480 lower to 90.174, while the nearby e-mini S&P 500 futures contract is up 18.00 points at 3,695.25.
Diesel
- January ULSD is up $0.0184, trading at $1.4800. The 20-day and 100-day moving averages are $1.4277 and $1.2643, respectively. The 14-day RSI is 66.92%.
- Diesel exports from China fell 13.2% in November when compared to the year prior, according to data from Reuters. Diesel exports totaled about 14 million barrels last month, while exports in October were around 16 million barrels. Increased air travel demand in the country and increased industrial use helped boost distillate refining margins however.
- The Reuters poll of analysts and traders is anticipating that the EIA will report a 904,000 barrel draw in U.S. distillate stocks for the week ending December 18. Yesterday an industry group reported that distillate stocks rose about 1 million barrels last week.
Gasoline
- January RBOB is trading $0.0241 higher at $1.3636. The 20-day and 100-day moving averages are $1.3011 and $1.1791, respectively. The 14-day RSI is 64.75%.
- China’s gasoline exports in November fell from record highs, according to data from China’s General Administration of Customs. Gasoline exports fell from around 14 million barrels in October to 9.2 million barrels in November.
- The Reuters poll of analysts and traders is anticipating that the EIA will report a 1.210 million barrel build in U.S. gasoline stocks for the week ending December 18. Yesterday an industry group reported that gasoline inventories fell 224,000 barrels last week.
Propane
- Propane prices are moving higher this morning. At last look Conway was up $0.0075, trading at $0.6600. Mt. Belvieu was up $0.0100, trading at $0.7000.
- An OPIS Survey of analysts and traders is predicting that the EIA will report a 2.375 million barrel draw in U.S. propane stocks for the week ending December 18.
Natural Gas
- January Natural Gas is down $0.085 at $2.695. The 20-day and 100-day moving averages are $2.669 and $3.121, respectively. The 14-day RSI is 46.17%.
- The Weekly Natural Gas Storage Report from the EIA will be released today. Reuters is expecting that the EIA will report a 164 Bcf draw in U.S. Natural Gas Stocks for the week ending December 18.
