Outlook: The energy complex has continued to push higher this morning, as crude and products are all trading well above even. Providing support to the complex comes from the increased likelihood that the $1.9 trillion stimulus proposal from President Biden will be be passed. The more bullish outlook comes as the Senate voted 50-49 along a party line vote to advance the bill as a budget resolution, which sets the reconciliation process into motion. The House of Representatives voted in a similar fashion. If both chambers pass it through reconciliation, the bill can be passed without any Republican support. President Biden and Senate Majority Leader Chuck Schumer have both stated that they want to seek common ground and engage in more collaborative discussions, but Senator Schumer has stated that the $618 billion GOP proposal falls too short and time is of the essence. If the larger stimulus bill were to pass, it would provide $1400 direct payments to those that qualify, increased unemployment benefits, and $350 billion for state and local governments. Better than anticipated private payroll data from ADP is also providing the market some support this morning. ADP reported that private companies added 174,000 new jobs in January. A survey of economists from Dow Jones anticipated an increase of 50,000 jobs. Equities have been slightly mixed this morning with the DJIA trading both sides of even while the S&P 500 and the Nasdaq Composite are higher on the day.
Crude
- Yesterday afternoon an industry group reported that U.S. crude oil inventories fell 4.3 million barrels in the week ending January 29. The Reuters poll of analysts and traders is estimating that the EIA will report a 446,000 barrel build. The Weekly Petroleum Status Report will be released at 9:30am CST today.
- The OPEC+ Joint Ministerial Monitoring Committee met today. Reuters is reporting that the advisory group has made no policy recommendations beyond what was decided in January. Saudi Arabia will voluntarily cut 1.0 million bpd of crude production through March, while Russia and Kazakhstan will be allowed to increase production by 75,000 bpd in both February and March.
- AstraZeneca has released results from its Covid-19 clinical trial. The results indicate that after just a single dose of the vaccine, efficacy is around 76%. When given a second dose over a longer-term interval, efficacy rose to 82%, according to a report from CNBC. The Phase 3 clinical trials were conducted in the U.K., Brazil, and South Africa, all of which have seen mutated versions of the virus which are reportedly more contagious. This development from AstraZeneca should be viewed as very positive.
- Yesterday Exxon reported a net annual loss of $22.4 billion for 2020. A coalition of investors has pushed for the company to renew focus on returns and pushing further into green energy.
- The March crude oil contract is trading $1.17 higher at $55.93. The 20-day and 100-day moving averages are $52.84 and $45.10, respectively. The 14-day RSI is 72.74%.
- As of 9:09 am CST: April Brent is up $1.02 at $58.48, the U.S. dollar index is 0.059 lower at 91.138, while the nearby e-mini S&P 500 futures contract is up 13.75 points at 3,832.00.
Diesel
- The March ULSD contract is trading $0.0260 higher at $1.7006. The 20-day and 100-day moving averages are $1.6019 and $1.3550, respectively. The 14-day RSI is 77.59%. An RSI above 70% indicates an overbought market from a technical perspective.
- Yesterday an industry group released its weekly inventory report and showed that U.S. distillate inventories fell 1.6 million barrels in the week ending January 29. The Reuters poll of analysts and traders is calling for a draw of 429,000 barrels.
Gasoline
- The March RBOB contract is trading $0.0409 higher at $1.6569. The 20-day and 100-day moving averages are $1.5536 and $1.2926, respectively. The 14-day RSI is 77.00%.
- Yesterday an industry group reported that U.S. gasoline inventories fell 240,000 barrels in the week ending January 29. The Reuters poll of analysts and traders is anticipating a build of 1.134 million barrels.
Propane
- Propane prices are moving lower this morning. At last look Conway was down $0.0125, trading at $0.8725. Mt Belvieu was down $0.0150, trading at $8400.
- According to an OPIS survey of analysts and traders, U.S. propane inventories are likely to have fallen by 2.91 million barrels in the week ending January 29.
- IHS Markit is estimating that the EIA will report a 3.383 million barrel draw in propane stocks.
Natural Gas
- The March Natural Gas contract is trading $0.046 lower at $2.799. The 20-day and 100-day moving averages are $2.656 and $2.868, respectively. The 14-day RSI is 56.95%.
- Natural gas values have traded both sides of even this morning after rising to the highest levels since late November earlier in the week. Stronger demand is anticipated in the weeks ahead as bitter cold weather is in the forecast for much of the northern half of the country.
- Tomorrow morning the EIA will release its Weekly Natural Gas Storage Report. The Reuters estimate is calling for a 192 Bcf draw in the week ending January 29.
