Outlook: Energies started the day off with some downward movement most likely due to some profit taking. Since that early sharp downturn the complex has bounced back to a degree now seeing slight gains in ULSD and Nat Gas. Supply concerns throughout the world are weighing heavy in the minds of most people especially in energies where weather and civil unrest continue to have a big impact. Look for continuing recovery throughout the day, however $80 will continue to act as a strong resistance level if the market continues to test it.
- Despite OPEC+ announcing that they plan to increase production 400,000 bpd the market has not had a bearish response to the planned increased supply.
- The market has been mainly supported by supply concerns specifically in Nigeria, Kazakhstan, Libya and Canada.
- Canada and the Upper Midwest US are experiencing a major cold spell that shut the Keystone Pipeline down yesterday for a period of time due to a freeze in the line.
- Libyan production was still lower than amid militia unrest. Nigeria only pumped 1.35 million bpd last month compared to their typical output of 1.7-2.0 million bpd. Kazakhstan’s largest oil producer is acing large protests at one of their most important oil fields.
- Despite an increase in cases multiple governments including the US, UK, and Spain are modifying Covid restrictions to reduce quarantine down to five days.
- Ecuador has restarted their export of crude with 2 360,000 tankers planning to ship out today.
- US non-farm payroll rose by 199k, significantly below the estimate of 400k.
- As of 11:31 am CST: Brent crude oil down $.24 to $81.77, US dollar index down 0.528 to 95.792 while the nearby e-mini-S&P 500 futures contract is down 11 points to 4677.00.
- The ULSD opened the day with a sharp downward move likely due to profit taking. It has since rebounded to slightly up in the nearby and deferred.
- The Session start with a significant drop similar to Crude and ULSD. RBOB has since recovered trading nearly even on the day.
- As Covid restrictions ease expect to see a growing demand for gasoline as more people get on the roads.
- Propane has moved slightly up in all contracts. Conway moving up .25 to $1.10 per gallon at 10:27 am CST
- Nearby Henry Hub Nat Gas $.119 to $3.933 at 10:31am CST
- The current weather forecasts are pushing Natural Gas this morning with a very cold outlook for a significant portion of the Midwest as well as Canada.
Since the dip before Christmas the crude market has made relatively steady gain and looks to continue to do so going forward. $80 will continue to act as resistance until the market can settle above that mark.