Outlook: Energies are seeing strong gains today as WTI has crossed the $80 mark. Compiling supply concerns throughout the world are weighing in on the market to support prices this morning. In the US, cold weather is causing pipelines to freeze, disrupting supply into the US from Canada. There are concerns OPEC+ will struggle to meet its production after failing to meet their December target by 320,000 bpd. The protests in Kazakhstan will be closely monitored as Russia has said they’ll send troops down to de-escalate the situation.
Crude
- IHS Markit further lowered its projection for China’s total oil demand in the first quarter by 420,000 bpd.
- Peak congestion in Xi’an which is populated by 13 million, fell by 29% on Jan 4th compared to the same day last year.
- Saudi Arabia cut oil prices for buyers in Asia, which could signal extra supplies form OPEC+ could loosen the market amid surging covid cases.
- Libya’s oil production is expected to return to its normal levels of 285,000-300,000 bpd as maintenance to their pipeline was completed.
- Ecuador lifted force majeure on oil contracts after their two main crude pipelines resumed operations. Their output returned to 434,108 bpd, up from 118,261 bpd.
- Russia and its allies have sent troops to help quell protests in Kazakhstan, although there is still no signs of disruptions to oil output.
- A deep-freeze in Canada and the Northern US is disrupting oil flows including the Keystone pipeline which carries 590,000 bpd from Alberta to the US Midwest.
- Goldman Sachs believes commodities are in a supercycle which could go on for a decade.
- The EIA reported a draw of 2.1 million barrels
- As of 9:55 am CST: Brent crude oil up $1.45 at 82.18, US dollar index down $.007 to 96.165 while the nearby e-mini S&P 500 futures contract is up 3 points to 4695.25.
Diesel
- China may cut its gas, diesel, and jet fuel export quotas by 40% y/y for 2022.
- 48% of Brazil’s 260,000 bpd diesel imports last year came from the US.
- The EIA reported a distillate build of 4.4 million barrels
Gasoline
- Google mobility index reported the US down 5.7% while the the Apple mobility index had the US down 0.9%
- The EIA reported a gasoline draw of 10.1 million barrel draw.
Propane
- EIA reported US propane stocks fell by 735,000 barrels.
- US propane exports fell by 496,000 barrels.
Natural Gas
- US gas demand rose by 2.3 Bcf/d yesterday. Demand is up 12 Bcf/d month-to-month.
- Overnight weather runs added 2 HDDs throughout the two week forecast.
- Total US dry production increased by 0.4 Bcf/d to 93.1 Bcf/d.
- The EIA reported a draw of 31 Bcf.
Petroleum inventories including the SPR continue to decline after the latest EIA report. Cold weather is causing supply disruptions in Canada’s Keystone Pipeline which produces 590,000 bpd to the US. Continued pressure on US inventories will continue to edge WTI and products higher.
