Outlook: The energy complex has traded both sides of even this morning as the market looks for direction after yesterday’s strong rally. Concerns with production still remain with some analysts expecting that a rebound could take a week or two at most of the oil and gas wells that had shut down. Much of Texas is still without power today with the Electric Reliability Council of Texas stating that 2.7 million are still experiencing outages. Prices for now will continue to be supported by the recent frigid temperatures but will likely return to formerly traded fundamentals soon. OPEC+ production cuts have stepped back into the spotlight as traders look towards the inevitable ease of curbs. Sources have reported to Reuters that the group will most likely ease cuts after April but will take a conservative approach. The OPEC secretary general stated today that he is optimistic about 2021 recovery but remains cautious as Covid-19 continues to dampen demand. Outside markets are taking a step back this morning with the S&P 500 and DJIA both trading slightly lower. The US dollar is stronger. Sentiment has improved as more positive Covid-19 headlines are reported. The World Health Organization stated today that the global number of new cases has dropped by 16 percent in the last week and the U.S. has seen a 23.7 percent decrease. President Biden stated yesterday that every American who wishes to be vaccinated will have the access to one by the end of July.
- According to data from Bloomberg, the recent cold snap has caused crude production to fall by 3.5 mmbpd, or 33%. Permian production, the largest U.S. oil field, is down by 65%.
- Retail sales were seen jumping by 5.3% in January, much higher than the anticipated 1.2% increase. The large move is likely contributed to the stimulus checks received that month. Each major category of spending reported on saw gains.
- India’s oil minister, Dharmendra Pradhan, has urged OPEC+ to ease production cuts going forward due to the recent spike in prices. Recent rallies have caused retail prices of gasoline and gasoil in India to reach record highs.
- A report from the Wall Street Journal is stating that Saudi Arabia plans to increase its production in the upcoming months and will announce its specific plans in the next OPEC meeting.
- The Weekly Petroleum Status Report from the EIA will be released on Thursday at 10:00am CST due to the Presidents Day holiday on Monday.
- The March crude oil contract is trading $0.09 higher at $60.14. The 20-day and 100-day moving averages are $55.57 and $46.67, respectively. The 14-day RSI is 88.25%. An RSI above 70% indicates an overbought market from a technical perspective.
- As of 9:30 am CST: April Brent is up $0.35 at $63.70, the U.S. dollar index is 0.495 higher at 91.004, while the nearby e-mini S&P 500 futures contract is down 21.75 points at 3,906.
- The March ULSD contract is trading $0.0067 higher at $1.8696. The 20-day and 100-day moving averages are $1.6751 and $1.4071, respectively. The 14-day RSI is 83.83%.
- ULSD has traded both sides of even this morning as the front month contract tested resistance near $1.84. After dropping lower briefly the market has now moved back into positive territory. Tomorrow’s EIA report will help the markets continue this upwards momentum if the expected inventory draw is realized.
- The March RBOB contract is trading $0.0103 higher at $1.7832. The 20-day and 100-day moving averages are $1.7297 and $1.4538, respectively. The 14-day RSI is 85.33%.
- Ford has reportedly placed its target for having “completely all-electric” passenger vehicles in Europe to 2030. The company has recently invested $1 billion in a German automotive plant.
- Propane prices moved more than 20 cents higher yesterday to $1.15 per gallon at the Conway hub due to extreme cold temperatures across the U.S. This week’s EIA report will likely show an increase in demand due to the recent cold temps while next weeks will showcase some of the lost production due to offline facilities.
- The March Natural Gas contract is trading $0.026 lower at $3.103. The 20-day and 100-day moving averages are $2.779 and $2.852, respectively. The 14-day RSI is 66.57%.
- Natural Gas prices are seeing a slight pullback this morning due mostly to profit taking and warmer upcoming forecasts. This week’s EIA report is expected to show a decent draw, but traders will likely look towards next week’s report which will include effects from the cold snap.
Official data reported this morning showed that Saudi Arabia’s crude oil exports hit an eight month high in December 2020 which marked the sixth consecutive monthly increase. Exports were seen rising to 6.495 million bpd which is the highest value seen since April of 2020.
|As of 9:30 AM CST
|Nat Gas March