Outlook: Energies are mixed as we start the week. Stronger demand expectations from OPEC into the new year are countered by ongoing concern about the omicron variant and its impact to demand. WTI has found recent stability in the low $70’s range. Additional SPR barrels coming to market has acted as a limiter to price gains. Trade looks forward to tomorrow’s monthly EIA forecast.
Crude
- Saudi Arabia’s oil minister said a lack of investment in fossil fuels may result in a global oil output drop.
- Iraq’s oil minister said on Sunday he expected OPEC at its next meeting to maintain its current policy of gradual monthly increases in supply by 400,00 bpd.
- OPEC raised its world oil demand forecast for the first quarter of 2022 by 1.1 million bpd, but left its full year growth prediction steady at 4.2 million bpd.
- Late Friday the US Department of Energy said they will sell 18 million barrels of crude oil from its strategic petroleum reserve on Dec 17.
- Energy Aspects cut its global demand forecast for oil products because of rising covid-19 infections.
- China will loosen blanket restrictions on energy consumption in order to ensure environmental and climate targets do not erode future economic growth.
- Chevron’s 122,000 bpd Richmond, CA refinery suffered an unplanned shutdown due to flaring at the facility.
- There are no major economic reports today.
- As of 11:34 am CST: Brent crude oil down $0.11 to $75.04, US dollar index up 0.107 to 96.204 while the nearby e-mini S&P 500 futures contract is down 29.00 points to 4,682.00.
Diesel
- Nearby ULSD futures are down 42 points.
- Renewed strength in global natural gas pricing can be viewed as a supportive factor to ULSD due to some fuel switching capability.
- Energy Aspects cut its demand forecast for jet fuel by 200,000 bpd for December and January due to the omicron variant. This represents a 3% drop in global demand.
Gasoline
- U.S. weekly gasoline imports slumped to 3-week low last week, according to Bloomberg ship tracking estimates.
- Apple’s global driving activity index rose 1.6% in the week of Dec 10.
Propane
- The market is looking past the warm weather to start the week and is up 3 cents as colder weather returns to the forecast in the 10 day outlook.
Natural Gas
- Natural gas is relatively flat on the day, backing off earlier strength amid stronger international prices.
- Colder weather starting later in the week may support short term prices.
Continuous Daily ULSD: With current trade at 2.2640, the 100-day moving average has acted as resistance in recent sessions at 2.2713 with near-term support in the 2.2050 range which corresponds to summertime highs. A further push lower would target the 200-day at 2.1295.
