Outlook: Limited fresh actionable market moving news brings about a mixed day of trade with an err to the upside.
Crude
- The Consumer Price Index for November came in +0.7% m/m and +6.8% y/y and is the highest since 1982.
- An upward trend in Cushing, OK supplies and the continued release of SPR barrels has acted to keep pressure on the forward curve. The Jan/Mar spread trades at 18 cents, down sharply from its peak of $1.93 on November 1. This spread has been moving towards contango, a dynamic which could deter investors as they would be rolling into a higher priced contract.
- The halfway point of Black Friday’s downturn near 73.00 has acted as resistance in recent days.
- OPEC and the IEA release their monthly reports next week.
- A bipartisan group of lawmakers sent a letter to President Biden warning his administration against a crude export ban as it could increase gasoline prices.
- Royal Dutch Shell shareholders approved the relocation of headquarters to London from the Netherlands.
- The FDA authorized Pfizer’s booster shots for 16 and 17 year olds.
- As of 10:33 am CST: Brent crude oil up $0.08 to $74.50, US dollar index down 0.188 to 96.083 while the nearby e-mini S&P 500 futures contract is up 14.00 points to 4681.00.
Diesel
- Nearby ULSD has been choppy today with gains and losses with current trade down 79 points to 2.2424.
- ULSD crack spreads have advanced in recent days with the current January HO crack at $23.16. It appears strength in crack spreads are not as much a function of higher demand as a function of releases of crude from the SPR.
Gasoline
- Nearby RBOB has consolidated near even on the day as it bounces between gains and losses.
- RBOB crack spreads have advanced in recent days with the nearby January RBOB crack positioned at $18.38, up from a low of $14.31 in mid-November.
Propane
- After a reduction of 17 heating degree days on Monday, overnight weather models added just 1 HDD in the 11-14 day view, providing a modest amount of price support.
- The longer term 16-20 day weather view shows a cold area pulling down from Canada. Coming in on Monday the weather forecasts will take us into the new year.
Natural Gas
- A cooler zone along the northwestern portion of the US appears to be tracking toward the mid-continent by about month end which has provided recent support to natural gas futures. The 200-day moving average has acted as strong resistance the last three days. The 200-day is positioned at 3.9000 with current trade 3.875.
- Yesterday the EIA showed a 59 bcf weekly natural gas withdrawal, greater than consensus estimates for a 55 bcf withdrawal.
- LNG export capacity from the US is expected to reach 13.9 bcf/d by the end of 2022. Australia exports 11.4 bcf/d and Qatar exports 10.4 bcf/d.
- European gas prices are headed for their sixth weekly gain as storage levels are 64%, levels not typically seen until January.
Continuous Daily Natural Gas: After Monday’s plunge lower natural gas has consolidated under its 200-day moving average.
