Outlook: The energy complex had been mixed earlier this morning but has now pushed further into positive territory as crude and products are now well above even. Providing a level of support to the market comes from the news that the coronavirus vaccine developed by the University of Oxford and AstraZeneca has been given emergency use authorization in the U.K. The vaccine is expected to be shipped across the country next week. The AstraZeneca shot does not need to be kept at extremely low temperatures like the Pfizer and Moderna vaccines do, and is cheaper than the others. According to government statistics, about 600,000 people in the U.K. have received the Pfizer vaccine. The U.S. has confirmed the first case of the mutant Covid-19 strain that was first discovered in the U.K., according to health officials. The new strain is reportedly as much as 70% more transmissible. Yesterday afternoon Senate Majority Leader Mitch McConnell blocked an attempt by Senate Minority Leader Chuck Schumer to unanimously approve direct payments in the coronavirus relief bill from $600 to $2,000. McConnell then introduced a bill that would boost the size of the checks, repeal section 230, and create a commission to study election issues. The bill introduced by McConnell is unlikely to garner much support across the aisle. Despite the uncertainty for increased direct payments, equities have pushed higher this morning as all three major averages are trading above even.
Crude
- According to a Reuters report, OPEC+ compliance in November was measured at 101%. An OPEC source stated that OPEC compliance was at 104%, while compliance was at 95% from their allies in the greater OPEC+ agreement.
- Saudi Arabia is expected to raise its official selling price for Asian buyers in February, according to a Reuters survey. Asian refiners expect the February OSP for Arab Light crude to increase by 33 cents per barrel.
- Yesterday afternoon an industry group released it’s weekly inventory report. They reported that U.S. crude stocks fell 4.79 million barrels last week.
- The Reuters poll of analysts and traders is predicting that the EIA will report a 2.583 million barrel draw in U.S. crude oil stocks for the week ending December 25.
- Today at noon CST Baker Hughes will release their Weekly Rig Count Report. Last week they reported that U.S. producers added 1 oil rig, bringing the total up to 264. Oil rigs are still down 413 when compared to the year prior.
- The February crude contract is trading $0.28 higher at $48.28. The 20-day and 100-day moving averages are $47.23 and $42.78, respectively. The 14-day RSI is 60.88%.
- As of 9:06 am CST: February Brent is up $0.18 at $51.27, the U.S. dollar index is 0.333 lower at 89.661, while the nearby e-mini S&P 500 futures contract is up 11.25 points at 3,731.25.
Diesel
- January ULSD is up $0.0096, trading at $1.4964. The 20-day and 100-day moving averages are $1.4513 and $1.2710, respectively. The 14-day RSI is 65.95%.
- The Reuters poll of analysts and traders is anticipating that the EIA will report a 529,000 barrel build in U.S. distillate stocks for the week ending December 25.
- Yesterday afternoon an industry group reported that U.S. distillate stocks fell 1.88 million barrels last week.
Gasoline
- January RBOB is trading $0.0156 higher at $1.4035. The 20-day and 100-day moving averages are $1.3289 and $1.1891, respectively. The 14-day RSI is 67.61%.
- The Reuters poll of analysts and traders is estimating that the EIA will report a 1.662 million barrel build in U.S. gasoline stocks for the week ending December 25.
- Yesterday afternoon an industry group reported that U.S. gasoline inventories fell 720,000 barrels last week.
Propane
- Propane prices are slightly mixed this morning. At last look Conway was down $0.0100, trading at $0.7050. Mt. Belvieu was flat, trading at $0.7400.
- An OPIS survey of analysts and traders is estimating that the EIA will report a 2.2 million barrel draw in U.S. propane inventories for the week ending December 25.
Natural Gas
- February is now the prompt contract as January has rolled off the board. February Natural Gas is up $0.007 at $2.451. The 20-day and 100-day moving averages are $2.574 and $3.062, respectively. The 14-day RSI is 38.99%.
- The EIA Natural Gas Storage Report will be released on Thursday.
The TSA has reported that the number of passengers going through security checkpoints at U.S. airports has been over 1 million in 8 of the last 12 days. Despite the increase, demand is still down about 50-55% in a year on year comparison. A full recovery in airline demand is going to be contingent on the coronavirus vaccines and their respective rollouts.
