Morning Highlights
Morning Highlights

01-03-22 Energies higher after falling overnight...

Riley Schwieger

Jan 3, 2022

Outlook: Energies are trading higher to start the morning looking to regain strength after crude fell $1.78 to end the year on Friday. Libya’s oil production drop and OPEC+ dropping their surplus number by 25% have WTI trading around 50 cents higher on the day. Covid cases continue to surge at record levels which continues to suppress market gains. While it seems to be pre-released that OPEC+ is going to stick with their production increase of 400,000 bpd, the meeting will still draw attention to see how they’ll handle the anticipated surplus down the road. OPEC+ has also reiterated that they are not concerned with long term demand impacts from the Omicron variant.         


  • OPEC+ sees a surplus of 1.4 million barrels a day in the first three months, about 25% smaller than estimated a month ago.
  • Libyan oil production is expected to fall to its lowest level in over a year at 700,000 bpd due to closures from a damaged pipeline and a shutdown of the Sharara oil field by militants.
  • Ten million people were diagnosed worldwide with Covid-19 last week, which is twice the pandemic’s previous weekly high.
  • OPIS reports continued studies in the UK and South Africa showed the Omicron variant is less likely to damage the human lungs and tends to cause milder illness.  
  • Baker Hughes reported the total US crude rig count was unchanged for the week ending in December 31.
  • OPEC+ is set to meet Tuesday January 4th at which time they are expected to rubber stamp a 400,000 bpd production increase in February.
  • As of 10:21 am CST: Brent crude oil down $0.71 to $78.82, US dollar index down 0.248 to 95.720 while the nearby e-mini S&P 500 futures contract is down 8.25 points to 4764.00.


  • 6,600 flights in the US were canceled over the weekend due to the winter storm that hit the Eastern US.
  • Indian diesel sales in December were 6.45 million tons, just 1.6% lower than the same month in 2019.


  • Nearby RBOB is up over 2 cents trading at $2.2480 and continues to trade tight to the 50 and 100 day moving averages at $2.3999 and $2.2430 respectively.


  • The 1-5 day forecast is colder along the East coast and warmer in the West and Rockies.
  • Propane is off 4 cents at $1.1050.

Natural Gas

  • US gas supply over the weekend turned softer after reaching 96 Bcf/d threshold on New Year’s Eve with Sunday dipping to just 91 Bcf on the day.  
  • LNG continues to remain strong with exports around 12 Bcf/d over the weekend.
  • Milder weather is forecasted for Europe and Asia in the next 7-10 days.

Natural Gas continues to trade below the 200 day moving average as warmer weather is forecast for Europe and Asia. $4.00 will continue to act as psychological resistance just above the 200 day moving average if weather models move colder.