Outlook: Energies are continuing to pull back today as oil has traded back below the 90-dollar mark. Bearish headlines have managed to control the market this week as prices come off 7-year highs. President Putin assured French President Macron that there are no plans for an invasion in Ukraine. President Biden also received backing from German Chancellor Olaf Scholz in a statement that they will act together with sanctions against Russia if an invasion takes place. Additionally, progress towards a deal with Iran that could bring back 1 million barrels to the market is helping support today's decline.
Crude
- Russia’s nuclear negotiator announced a final document towards the Iran nuclear deal despite the US suggesting that major headwinds remain.
- If sanctions are lifted against Iran, they could supply around 1 million barrels back to the market.
- President Putin promised French President Macron that he has no intentions for an invasion.
- Germany will back the US in sanctions against Russia if an invasion takes place.
- US December crude oil exports rose to 3.48m bpd from 3.11m bpd in November.
- Reuters estimates a build in crude stocks of 700,000 barrels.
- The API will report inventory estimates this afternoon.
- As of 9:35 am CST: Brent crude oil down $1.89 to $90.83, US dollar index up $.250 to 95.647 while the nearby e-mini S&P 500 futures contract is down 8.00 to 4467.75.
Diesel
- Reuters estimates a diesel draw of 1.8 million barrels.
- OAG Aviation reported airlines offered almost 79 million seats last week, which is around a quarter less than the same week in 2019.
- Reuters estimates a gasoline build of 1.5 million barrels.
- Group 3 and Chicago basis have fallen ~5 cents w/w.
Propane
- Propane is down 3 cents with Conway at $1.22 and Belvieu at $1.21
- Reports of canceled cargoes in the Gulf are putting pressure on hubs.
Natural Gas
- Biden warned yesterday that Nord Stream 2 will be halted if Russia invades Ukraine.
- Total US demand fell yesterday by 2 Bcf/d to 128.9 Bcf/d.
- Overnight weather runs added 6 HDDs back to the two-week forecast.
US Oil Rigs: The US oil rigs continue to rise but not as fast as they did after previous price recoveries. Many shale firms filed for bankruptcy to manage debt due to the pandemic and are struggling to bring back investors. Environment policies also continue to put pressure and elevate production costs.
