Outlook: The energy complex has continued its move higher this morning with crude prices touching new 12 month highs. The continuous WTI crude chart was seen breaching the $55 mark today for the first time since January of 2020. Support this morning stems from the prospect of demand recovery along with lower production. Yesterday, Saudi Arabia began its voluntary 1 million bpd cuts that will last through February and March. OPEC’s exports will be decreased significantly due to this cut with many analysts expecting supply shortages of around 1.5 million bpd this year. OPEC+ experts are scheduled to hold a meeting today in order to discuss the recent price rallies. The meeting will review the group’s demand outlook along with members’ compliance with the current output cuts. Reuters has reported that a document created for this meeting lowered the oil demand growth by 300,000 bpd to 5.6 million bpd. A ministerial panel is also scheduled to meet tomorrow in order to review the recent market activity. Optimism for increased heating fuel demand has also propped up markets this morning as a large portion of Northeast U.S. is now in a severe winter storm. As for outside markets, equities are also seen starting the day higher. Optimism in regard to vaccine efforts has surfaced this morning as the U.S. reportedly administered more vaccines in the past day than it had positive cases. Pfizer also announced that they would have 200 million additional doses delivered to the U.S. by May, which is sooner than expected. Overall market sentiment today is overwhelmingly positive as both energies and equities seem to be on a bullish run.
- Oil and gas company BP reported that January retail volumes were down by about 20%, starting off the year on a negative note as the company saw a fourth quarter decline in volumes of just 11%. The company however stated that they expect global demand to recover mid-year.
- Exxon was seen posting its first annual loss as a public company due to the pandemic’s effects. BP also reported its first annual loss in a decade, citing the same cause.
- Russian oil production was seen increasing in January; however, the country was still in line with the agreed upon production cuts. Kazakhstan on the other hand saw decreasing oil volumes for the month.
- A Reuters analyst has stated that they expect China to continue increases in imports of crude oil and likely import LNG quantities similar to its December record high. The analyst believes that China’s independent refiners will want to use most of their quotas in the next few months in order to lock in supplies early.
- The March crude oil contract is trading $0.53 higher at $52.73. The 20-day and 100-day moving averages are $52.58 and $44.94, respectively. The 14-day RSI is 71.15%.
- As of 9:30 am CST: April Brent is up $1.60 at $57.95, the U.S. dollar index is 0.213 higher at 91.193, while the nearby e-mini S&P 500 futures contract is up 53.75 points at 3,819.5.
- The March ULSD contract is trading $0.0350 higher at $1.6819. The 20-day and 100-day moving averages are $1.5939 and $1.3499, respectively. The 14-day RSI is 76.79%. An RSI above 70% indicates an overbought position from a technical standpoint.
- Severely cold weather forecasted for the Northeast and Midwest is expected to support ULSD markets as analysts expect an uptick in heating fuel demand. The ULSD market led the way higher during yesterday’s session with board crack being pushed higher by 60 cents.
- The March RBOB contract is trading $0.0338 higher at $1.6239. The 20-day and 100-day moving averages are $1.5442 and $1.2874, respectively. The 14-day RSI is 74.61%. An RSI above 70% indicates an overbought position from a technical standpoint.
- Several automakers including Toyota, Fiat Chrysler, and Hyundai has withdrawn from the ongoing legal challenge against California that sought to limit California’s power in setting its own zero emission rules. The companies stated that their actions are a gesture of good faith in order to work alongside President Joe Biden.
- Propane prices are moving higher this morning. At last look Conway was up $0.0300, trading at $0.9050. Mt Belvieu was up $0.0150, trading at $0.8850 as well.
- Firmness in the market continues as prices are propped up due to cold weather forecasts and strength in the natural gas market. Tight supplies also lend support to prices.
- The March Natural Gas contract is trading $0.120 higher at $2.97. The 20-day and 100-day moving averages are $2.657 and $2.873, respectively. The 14-day RSI is 65.15%.
- Additional heating demand is expected to continue as Earthstat Weather Models was seen adding 39 Heating Degree Days overnight.
OPEC+ has reported that they expect the global oil market to remain in a deficit throughout 2021 despite the groups decrease to 2021 demand growth. Production cuts, including Saudi Arabia’s voluntary cut, are expected to help the market remain balanced throughout the year.
|As of 9:30 AM CST||WTI March||ULSD March||RBOB March||Nat Gas March|