Outlook: Energies are starting the day with significant gains as we carry over from yesterday's shortened trading session. The Russia/Ukraine conflict has taken the driver's seat to start the week as Putin has taken additional measures and increased instability of the situation at the border. Following his actions to recognize two breakaway regions in Ukraine and move troops into those areas, the US and Europe have said they will publicize sanctions Tuesday. On the bearish front, there is speculation from negotiators that an outcome will be reached in the Iran nuclear deal by the end of the week. OPEC+ continues its efforts to assess the overall health of the market with these two market drivers causing high volatility but reiterated their belief that their 400k bpd production targets will stabilize prices.
Crude
- President Putin signed an order to send peacekeeping forces to the two breakaway areas he officially recognized Monday.
- The US and European governments threatened new sanctions Tuesday after Putin recognized the two self-proclaimed separatist republics in eastern Ukraine.
- French, Russian, and UK negotiators believe an outcome with the Iran nuclear deal will come within days.
- OPEC+ members Iraq and Nigeria, believe there’s no need to increase production targets and that the current output will restore supply.
- OPEC+ reported 130% compliance for January.
- India, the world’s third-biggest oil user, expects consumption of petroleum fuels to hit record levels next year despite surging oil prices.
- The API will report inventories tomorrow afternoon due to the holiday and the weekly EIA report will be released Thursday morning at 10:00 am CST.
- As of 9:27 am CST: Brent crude oil up $0.98 to $96.37, US dollar index down $.075 to 96.001 while the nearby e-mini S&P 500 futures contract is up 6.5 to 4349.50.
Diesel
- The CFTC commitment of traders shows that diesel has the lowest net length among products. This is favorable for adding new net length amidst a tight market.
Gasoline
- Marathon’s Garyville refinery in Louisiana was impacted by an explosion, which could threaten fuel supplies.
- The OPIS Retail Report survey showed gasoline demand climbed by 5.5% last week.
Propane
- There were no markets yesterday due to the holiday.
- Conway is up 9.5 cents to $1.4250 and Belvieu is up 10 cents to $1.4775.
- Propane is seeing a lift from stronger international markets this morning.
Natural Gas
- Overnight weather runs removed over 32 HDDs through the two-week forecast.
- A cold backend of the forecast is still supporting prices.
- Total US demand fell over the weekend down 20 Bcf/d from Friday’s levels.
Continuous Daily WTI: Oil has established a trade channel between $90-$95 as two headlines continue to pull in opposite directions. The market may look for a breakout if an invasion takes place or the Iran nuclear deal is officially revived.
