Outlook: Energy markets have been slightly mixed this morning despite President Trump signing the coronavirus relief and government funding bills on Sunday. By delaying the signing of the bill past Saturday, around 14 million people temporarily lost unemployment benefits. The stimulus measure extends the expanded jobless benefits into March. The $900 billion coronavirus relief bill includes $600 direct payments to taxpayers making under a certain income threshold. President Trump has urged members of Congress to increase the direct payment amounts to $2,000. The U.S. House of Representatives will vote on a measure to increase the stimulus checks to $2,000 today. Providing a boost to the energy complex this morning is the news that AstraZeneca is poised to receive regulatory approval from the U.K.’s drug regulator. The approval would allow doses of the vaccine to be distributed as early as this week. Over 30,000 new cases and over 300 deaths were reported in the U.K. on Sunday. A mutant strain of the virus that has been found to be more transmissible has led to travel restrictions in and out of the country. In the final trading week of the year, equities have opened higher. All three major averages have hit record highs at the open. It would seem that equities are poised for a Santa Claus Rally, which is a sustained increase in the stock market that occurs in the last week of December through the first two trading days of January.
Crude
- OPEC+ is scheduled to meet next week. The 47th meeting of the Joint Technical Committee and the 25th meeting of the Joint Ministerial Monitoring Committee have been rescheduled for January 3 and 4. OPEC+ is scheduled to increase production by 500,000 bpd starting in January.
- China’s crude oil imports from the U.S. increased to the third highest total on record, according to customs data. China’s oil imports hit about 879,000 bpd in November. Imports in September, which set the record high, were at about 950,000 bpd.
- Russian Deputy Prime Minister Alexander Novak (formerly the country’s Energy Minister) stated today that he expects there to be about 5 to 6 million bpd in additional crude oil demand in 2021.
- On Wednesday of last week Baker Hughes released their Weekly Rig Count Report and showed that U.S. producers added 1 oil rig, bringing the total to 264. Rig counts have risen for several weeks straight but are still down 422 when compared to the year prior. This week’s report will be released on Wednesday due to the New Years holiday at the end of the week.
- The CFTC’s Commitments of Traders report will be released this afternoon. The report scheduled for Friday, January 1 will be released on Monday, January 4.
- The February crude contract is trading $0.17 lower at $48.06. The 20-day and 100-day moving averages are $46.96 and $42.69, respectively. The 14-day RSI is 62.43%.
- As of 10:04 am CST: February Brent is up $0.03 at $51.32, the U.S. dollar index is 0.004 lower at 90.319, while the nearby e-mini S&P 500 futures contract is up 33.25 points at 3,728.25.
Diesel
- January ULSD is up $0.0006, trading at $1.4906. The 20-day and 100-day moving averages are $1.4390 and $1.2677, respectively. The 14-day RSI is 67.48%.
- China has raised quotas for refined fuel exports by about 5.4% for 2021. The first issue quota for 2021 totaled 29.5 million tonnes, which is equivalent to about 216 million barrels. That is about 11 million barrels more than the first issued quota in 2020.
Gasoline
- January RBOB is trading $0.0029 lower at $1.3760. The 20-day and 100-day moving averages are $1.3133 and $1.1842, respectively. The 14-day RSI is 66.61%.
- BMW is planning to increase production of electric vehicles, according to an executive at the company. BMW is planning to produce 250,000 more electric vehicles from 2021 – 2023 than they originally had planned. The company wants around 20% of total vehicle sales to be electric cars compared to about 8% in 2020.
Propane
- Strong exports are pushing propane prices higher this morning. At last look Conway was up $0.0425, trading at $0.7050. Mt. Belvieu was up $0.0350, trading at $0.7350.
- The NOAA has forecast a significant chance for warmer than average temperatures for much of the country in both the 6-10 day and 8-14 day forecast. Last week the EIA reported that demand for propane fell 379,000 bpd in the week ending December 18.
Natural Gas
- January Natural Gas is down $0.254 at $2.264. The 20-day and 100-day moving averages are $2.614 and $3.106, respectively. The 14-day RSI is 30.32%. An RSI at 30% or lower indicates an oversold market from a technical perspective.
- Natural gas futures have plummeted. Weak demand and mild weather have pressured prices to the lowest levels since late September. Earthsat models have subtracted 46 Heating Degree Days over the weekend. Adding further pressure to prices, production estimates have been surprisingly higher than expected.
The International Monetary Fund has forecast that global GDP could contract around 4.4% in 2020. They predict that global GDP will rebound next year however, as they’ve forecast 5.2% growth in 2021.
