Outlook: Energies are seeing additional strength today after closing above $90 in yesterday’s session. Below freezing temperatures in Texas raised concern that freeze-offs could hinder production and have sent oil to 7-year highs. Inventories continue to draw down which magnifies any threat to current US production. OPEC+ production will also continue to be a key market driver as oil sets its sights on $100. Continued over-compliance has built-in additional market sensitivity as OPEC members continue to experience production disruptions. The threat of Russia invading Ukraine remains prominent as no progress has been made for peaceful diplomacy.
Crude
- Russia struck a natural gas deal with China and stated their support for China in their conflict with Taiwan.
- Rosneft signed a 10-year deal to supply crude oil to China’s CNPC via Kazakhstan according to the Russian producer. Total deliveries are set at 100m tons.
- Saudi Aramco has started preliminary discussions on a fresh stock offering that could raise more money than its landmark listing according to Bloomberg.
- The global oil and gas rig count rose by 69 to 1,632 in January according to Baker Hughes.
- The Bureau of Labor Statistics reported nonfarm payrolls surged by 467,000 beating the estimate of 150,000
- Unemployment increased to 4% edging the estimate of 3.9%
- The commitment of traders will report positions at 2:30 pm.
- Baker Hughes will report their oil rig count around noon.
- As of 10:24 am CST: Brent crude oil up $1.84 to $93.00, US dollar index up $.115 to 95.497 while the nearby e-mini S&P 500 futures contract is down 9.5 to 4459.5.
Diesel
- US diesel demand has climbed to its highest levels for this time of year in nearly 30 years according to Bloomberg data.
Gasoline
- Retail gasoline prices have hit their highest level since 2014 at $3.423 a gallon according to AAA.
- Decreased travel demand should be expected with two back-to-back major winter storms impacting parts of the US.
Propane
- DTN weather forecast increased February HDDs to 101.2% versus up from 95.8%
- Conway is up 1.5 cents to $1.30 and Belvieu is up .25 cents to $1.28
Natural Gas
- Russia signs a deal with China to ship 10 Bcm of gas per year via a new route.
- Exxon is looking to sign a long-term LNG supply contract with India.
- The EIA reported a draw of 268 Bcf yesterday, which was the largest draw of the season.
- Total US demand grew by 6.5 Bcf/d yesterday.
- Weather runs have decreased HDDs by 17 in the last five days.
Retail Gasoline: Retail gas prices continue to soar as oil has surpassed 90 dollars. Record prices will continue to put pressure on the Biden Administration, which has been releasing barrels from the SPR in efforts to slow the pace.
