Outlook: Energies are holding steady ahead of the EIA report this morning. Biden expressed he is still determined to lower fuel prices but knows it will be a challenge as there is a lot of bullish momentum behind the market despite the dip today. The crude build estimated by the API could be helping suppress markets to start the morning. The EIA numbers will likely take control after numbers are released. If we see another draw which is estimated by Reuters, we could see the market turn green quickly. Alternatively if the EIA falls in line with the API numbers we could see this slide extend lower.
Crude
- China disclosed its first Iranian oil imports in a year amid talks between Tehran and other world powers that would attempt to revive nuclear accord and to lift US sanctions.
- An 8th round of talks in efforts to revive the nuclear deal is currently underway in Vienna.
- Biden expressed he is committed to lowering fuel prices in a press conference yesterday and will hold discussions with OPEC+ as necessary.
- Biden reiterated in his press conference that Russia will face “severe economic consequences” if they choose to invade Ukraine.
- Baker Hughes believes we’ll see pre-pandemic oil demand by the end of 2022.
- The Dec22/Dec23 crude spread settled at it’s widest level since October at $7.09 yesterday.
- The API estimated crude stocks rose 1.4 million barrels this week.
- Reuters is estimating a 900,000 barrel draw in today’s EIA report
- The EIA will report inventories at 10:00 cst today, slightly delayed from the normal 9:30 report.
- As of 9:42 am CST: Brent crude oil up $0.18 at 88.63, US dollar index up $.013 to 95.519 while the nearby e-mini S&P 500 futures contract is up 58 points to 4582.25.
Diesel
- Jet fuel prices in Asia hit the highest level since 2018.
- The prompt diesel spread has shifted to it’s widest level since 2015, settling at 5.59 cents yesterday.
- The API estimated diesel stocks fell 1.2 million barrels.
- Reuters is estimating a 900,000 barrel draw in today’s EIA report
Gasoline
- The API estimated gasoline stocks rose 3.5 million barrels.
- Reuters is estimating a 2.6 million barrel build in today’s EIA report.
Propane
- Unseasonably cold temperatures are working their way through the US this week
- Industry estimates are calling for a 3.1 million barrel draw from last week.
Natural Gas
- The EIA is expected to report a 193 Bcf draw today.
- Total US demand increased by 3.5 Bcf/d yesterday.
The chart below shows US drilled but uncompleted wells count (white line) in relation to US production (yellow line.) There are two concerns here, the extent of DUCs declining and increasing concern over a lack of frac crews to complete remaining the remaining DUCs.
