Outlook: Whatever the outcome of the omicron variant, consumer confidence could be hit heading into the holidays, which serves as a negative to sentiment in energies. Fed Chair Powell this morning said it may be appropriate for the Fed to wrap up its bond tapering a few months earlier than anticipated, sending equities reeling lower and pulling energies lower. We will see industry estimates on weekly inventories later this afternoon followed by the more relied-upon EIA stats tomorrow morning. OPEC+ is set to decide on production policy on Thursday. Up until OPEC+ decides, downside risk appears to be prevalent particularly amid omicron uncertainty.
Crude
- Moderna’s CEO Stephane Bancel said the world may need new covid vaccines as current vaccines won’t be as effective against omicron as they have been for delta.
- Covid cases in Guateng, South Africa, which is thought to be the epicenter of the omicron variant have actually come down from 2,629 on Nov 27 to 1,909 on November 29. The EU has confirmed 44 cases of the omicron variant in 11 countries.
- Whatever the outcome of the omicron variant consumer confidence could be hit heading into the holidays, which serves as a negative to sentiment in energies.
- Shell’s CEO says the demand increase is outpacing the growth in supply and the oil market is getting tight because of lack of investment.
- A U.S. state department advisor said the U.S. could release more SPR barrels if the need arises.
- OPEC+ is set to decide on production policy for January on Thursday of this week.
- JBC Energy says OPEC output rose 340,000 bpd in November to 27.99 million bpd.
- Talks are occurring this week in Vienna regarding Iran’s nuclear program with the goal of reviving the 2015 nuclear deal.
- A Bloomberg survey suggests tomorrow the EIA may show weekly crude oil inventories were down 1.4 million barrels last week. A Reuters poll suggests a 1.7 million barrel draw.
- Bloomberg data suggests US crude imports rose 537,600 bpd last week to 2.96 million bpd.
- JPMorgan analyst suggests Brent will reach $125 in 2022 and $150 in 2023 due to the lack of global spare capacity, particularly among the OPEC+ group.
- The Jan/Feb Brent spread traded as high as $1.35 last Wednesday and traded into a slight carry this morning with the current backwardation at $0.12.
- As of 11:17 am CST: Brent crude oil down $3.04 to $70.40, US dollar index down 0.070 to 96.271 while the nearby e-mini S&P 500 futures contract is down 76.00 points to 4575.00.
Diesel
- ULSD futures are down nearly 9 cents amid covid concern and a setback in equities (see chart below).
- A Reuters poll suggests tomorrow the EIA may show a weekly distillate build of 1.8 million barrels.
Gasoline
- Nearby RBOB is down nearly 10 cents amid today’s broad sell-off.
- Gasoline prices at the pump reached $3.42 earlier this month but are set to decline considering recent rack price setbacks.
- A Reuters poll suggests tomorrow the EIA may show a weekly gasoline build of 1.3 million barrels.
Propane
- Conway propane is back near 1.10, pulled lower amid another deep setback in WTI and natural gas.
Natural Gas
- Natural gas futures are below their 100-day moving average, a level that has acted as strong support in recent weeks. A settle near current trade which is $4.59 then leads to a fresh look at the 200-day moving at 3.860.
Currently trading near 2.0500, January ULSD has broken below its 200-day moving average which comes in at 2.1100, which now becomes resistance. Trendline target to the downside is 1.9800.
