Outlook: The energy complex started off the day in the green but has since fallen lower as traders await this morning’s updated Weekly Petroleum Status report. RBOB futures are seen trading slightly lower while ULSD and WTI sit close to even. Support continues to stem from the adverse weather in the south along with yesterday’s mostly supportive inventory numbers reported by a trusted industry group. We will see if the EIA confirms the large draw in crude oil reported by the industry group yesterday afternoon. Texas continues to see freezing temperatures today for the sixth consecutive day. There is still concern in the markets regarding the effects of these temperatures and the large refining and production outages. It is still expected that it could possibly take weeks for the state to see a full recovery of its energy production. Analysts state that 4 million bpd of refining capacity has been lost along with 1 million bpd of crude oil production. It is likely that these unexpected outages will help U.S. inventories drop back down to the 5 year averages quicker than originally expected. While prices will continue to be propped up by recent events in the near term, some downside risk can be expected when it comes to upcoming OPEC+ meetings. It is largely expected that OPEC will ease curbs after April due to the recent price recovery. Saudi Arabia is also expected to soon end their voluntary 1 million bpd cut as producers wish to capture profit from the recent rally in prices. Equity markets this morning are trading weaker due to disappointing jobless claims numbers. Covid-19 issues will continue to subdue markets for now, but vaccine efforts persist and there is hope for demand restoration in the coming months.
- Yesterday an industry group reported a larger than expected draw of 5.8 million barrels which helped prop up prices in the late trading hours.
- The Weekly Petroleum Status Report from the EIA will be released this morning at 10:00am CST due to the Presidents Day holiday on Monday. Analysts are expecting the group to report a 2.4 million barrel draw in crude stocks.
- The Labor Department reported this morning that initial jobless claims totaled to 861,000 last week, above analyst’s expectations of 773,000.
- The March crude oil contract is trading $0.07 higher at $61.21. The 20-day and 100-day moving averages are $55.94 and $46.99, respectively. The 14-day RSI is 84.24%. An RSI above 70% indicates an overbought market from a technical perspective.
- As of 8:55 am CST: April Brent is unchanged at $64.34, the U.S. dollar index is 0.216 lower at 90.735, while the nearby e-mini S&P 500 futures contract is down 32.5 points at 3,895.5.
- The March ULSD contract is trading $0.0013 higher at $1.8390. The 20-day and 100-day moving averages are $1.6875 and $1.4137, respectively. The 14-day RSI is 85.48%.
- ULSD has managed to break above the resistance level this morning seen at $1.84. The market may have enough upwards momentum to possibly breach above $1.90 if prices are able to recover after the report and settle above the resistance.
- Analysts are estimating that we will see a draw in distillate stocks of 1.6 million barrels on this morning’s Weekly Petroleum Status Report. Yesterday an inventory group reported a larger than expected draw of 3.5 million barrels
- The March RBOB contract is trading $0.019 lower at $1.7915. The 20-day and 100-day moving averages are $1.7421 and $1.4596, respectively. The 14-day RSI is 89.14%.
- Analysts are estimating that we will see a build in gasoline stocks of 1.4 million barrels on this morning’s Weekly Petroleum Status Report. Yesterday afternoon an inventory group reported a build of 3.9 million barrels.
- Propane prices have moved aggressively higher this morning. At last look Conway was up $0.2000, trading at $1.4000. Mt Belvieu was up $0.0700, trading at $1.0400.
- Analysts are estimating that propane inventories will fall by about 3.3 mmb on this morning’s EIA report. With this week’s frigid temperatures, traders will put most of their focus on next week’s report.
- The March Natural Gas contract is trading $0.101 lower at $3.118. The 20-day and 100-day moving averages are $2.815 and $2.852, respectively. The 14-day RSI is 65.24%.
- The Mexican government has reportedly called on top U.S. representatives in regard to the stop in natural gas exports from Texas to Mexico. As the state had ordered the fuel to remain in Texas due to cold weather, Mexico experienced shortages in supply that caused about $2.7 billion in losses. Due to the shortage the Mexican President has asked that citizens consume less energy between 6-11 PM.
- Analysts expect that we will see a withdrawal of about 202 to 299 bcf on this morning’s EIA report. Most traders will likely look towards next week’s report however as it will reflect the lost production due to the cold snap.
The EIA’s February 2021 Short-Term Energy Outlook has forecast that U.S. LNG exports will exceed pipeline natural gas exports in the first and fourth quarters of 2021 along with the entirety of 2022.
|As of 8:55 AM CST||WTI March||ULSD March||RBOB March||Nat Gas March|