Outlook: Energies are trading lower today reversing the marginal gains from yesterday’s trade. Weak payroll data and equities are holding influence with a lack of energy news in the headlines. A surprise drop in private payrolls suggests a temporary slowdown in the economy which can be tied to Omicron. President Putin continues to claim he is interested in diplomacy with no intentions of an invasion, but troops continue to head towards the borders around Ukraine. Production disruptions will be closely monitored as global supply remains tight with demand climbing to pre-covid levels. The $90 psychological resistance will likely continue to hold its ground until a new market driver comes to fruition.
Crude
- A Nigerian ship exploded off their coast which supplies 22,000 bpd to the market.
- The UAE intercepted 3 drones that had entered their airspace on Wednesday.
- Kazakhstan’s crude production is down 55,000 bpd to start February according to a Bloomberg report.
- Brazil’s average oil output drops 1.18% to 2.905 million bpd according to a bulletin published on regulator ANP’s website.
- The EIA reported commercial crude fell 1.047 million barrels and the SPR fell by 1.8 million barrels
- The US Strategic Petroleum Reserve hit its lowest level since 2002.
- The ADP report showed US private payrolls fell in January for the first time in a year.
- Non-farm payrolls report tomorrow and are estimated to fall 250,000 month-month
- As of 9:07 am CST: Brent crude oil down $.71 to $88.75, US dollar index down $.344 to 95.592 while the nearby e-mini S&P 500 futures contract is down 65.5 to 4510.00.
Diesel
- The March-April spread hit its highest level since 2015 at 10 cents.
- The EIA reported a draw of 2.4 million barrels
Gasoline
- The EIA reported a build of 2.1 million barrels.
- Decreased travel demand should be expected with two back-to-back major winter storms impacting parts of the US.
Propane
- The EIA reported a larger than expected draw of 4.32 million barrels.
- Propane inventories fell to 49.75 million barrels which is the lowest level since 2011.
Natural Gas
- Nearby Nat Gas is down ~50 cents on the day, pulling back from yesterday’s jump.
- The EIA is estimating a 274 Bcf draw.
- Cold weather threatens Texas and the power grid as temperatures are forecast in the teens.
- Total US demand climbed by 7.8 Bcf/d yesterday, reversing the losses over the last 4 days.
Continuous WTI: A bullish OPEC+ meeting and another net draw of petroleum inventories were not enough to bolster oil above $90. OPEC’s widely publicized increase of 400,000 bpd may have been priced in, as traders are now focusing on whether they can meet their targeted increases each month.
