Outlook: The energy complex has been slightly mixed this morning as rising crude and product inventories weigh on the market. Yesterday afternoon an industry group reported that U.S. crude stocks rose 2.6 million barrels in the week ending January 15. They also showed that distillate inventories rose 816,000 barrels, while gasoline stocks rose 1.1 million barrels. The Weekly Petroleum Status Report from the EIA will be released on Friday morning due to the MLK Holiday on Monday and Inauguration day yesterday. Yesterday President Joe Biden was sworn into office. Biden signed 17 executive orders shortly after taking office. Rejoining the Paris Climate Accord, as well as several EO’s related to the pandemic were signed. Three Democratic Senators were also sworn into office yesterday, giving Democrats a majority. Chuck Schumer has since been appointed to Senate Majority Leader. It is expected that an aggressive stimulus agenda will almost immediately begin to be pursued. The Biden administration has proposed a $1.9 trillion stimulus package. That proposal has boosted investor sentiment in the energy and equity sectors to some degree. Despite weak jobs data from the U.S. Department of Labor this morning, equities continue to push higher as all three major averages are slightly above even on the day. Earlier in the session the DJIA hit an intra-day all-time high.
Crude
- TC Energy, the company that owns the Keystone XL pipeline, announced that they will be cutting more than 1,000 construction jobs in the coming weeks and will halt work on the pipeline, according to a Reuters report. President Biden has revoked the project’s presidential permit, which was needed to continue the U.S. portion of construction.
- This morning the U.S. Department of Labor released its weekly jobs report and showed that first time claims for unemployment rose to 900,000 in the week ending January 16. Economists polled by Dow Jones anticipated a measure of 925,000. Continuing claims showed a slight decrease, falling by 127,000 to 5.05 million.
- Libyan crude oil production recently hit 1.3 million bpd, according to the state-owned National Oil Corporation. Production in the country rapidly rose following the end of a military blockade of the country’s ports and oil facilities. Despite the rapid rise, Mustafa Sanalla, head of the NOC, has stated that the country needs stability and funding to improve aging oil infrastructure. On January 16, production fell by 200,000 bpd as the main pipeline had to be shutdown for maintenance work. Sanalla stated that the pipeline is more than 60 years old. Libya is currently exempt from OPEC+ production quotas.
- The Reuters poll of analysts and traders is expecting the EIA to report a 1.167 million barrel draw in U.S. crude oil stocks for the week ending January 15.
- The Baker Hughes Rig Count Report will be released tomorrow at noon CST. Last week they reported that U.S. producers added another 12 oil rigs, bringing the count up to 287.
- The March crude oil contract is trading $0.13 lower at $53.18. The 20-day and 100-day moving averages are $50.62 and $44.11, respectively. The 14-day RSI is 68.18%.
- As of 10:05 am CST: March Brent is down $0.16 at $55.92, the U.S. dollar index is 0.364 lower at 90.135, while the nearby e-mini S&P 500 futures contract is up 7.00 points at 3,852.00.
Diesel
- The February ULSD contract is trading $0.0042 lower at $1.5962. The 20-day and 100-day moving averages are $1.5399 and $1.3143, respectively. The 14-day RSI is 68.45%.
- India’s crude oil throughput rose 0.9% in December 2020 when compared to the same time period the year prior, according to provisional government data. Fuel consumption rose 4.1% in December, the highest since January 2020. Indian refiners operated at an average rate of 99.1% last month, down slightly from the 101.2% reported in November.
- The Reuters poll of analysts and traders is predicting that the EIA will report a 1.214 million barrel build in U.S. distillate stocks for the week ending January 15.
Gasoline
- The February RBOB contract is trading $0.0006 lower at $1.5433. The 20-day and 100-day moving averages are $1.4645 and $1.2411, respectively. The 14-day RSI is 69.79%.
- The Reuters poll of analysts and traders is estimating that the EIA will report a 2.771 million barrel build in U.S. gasoline stocks for the week ending January 15.
Propane
- Propane prices have reversed course and pushed slightly higher this morning. At last look Conway was up $0.0050, trading at $0.8850. Mt Belvieu was up $0.0100, trading at $0.8700.
- The news of some cancelled cargoes from Asian buyers prompted the propane market to quickly fall from recent highs set on Friday. Traders will look ahead to the Weekly Petroleum Status Report set to be released on Friday morning as the next catalyst to drive trading decisions.
Natural Gas
- The February Natural Gas contract is trading $0.052 lower at $2.487. The 20-day and 100-day moving averages are $2.611 and $2.992, respectively. The 14-day RSI is 40.48%.
- Mild weather and an anticipated drop in demand have continued to pressure natural gas futures lower.
- The Weekly Natural Gas Storage Report from the EIA will be released on Friday at 9:30am CST, a day later than usual due to the MLK Holiday on Monday.
