Outlook: Energies are starting the week weaker with crude trading to its lowest level since December 2021. Protests have broken out in China over the weekend due to the ongoing covid protocols being enforced. The fear of growing cases and retaliation from the government provided bearish pressure on the market. The EU will continue price cap discussions today while Russia moves forward to sign a decree that will disallow Russian oil from being sold to anyone participating in the price cap. China has reduced oil purchases ahead of the price cap and embargo enforcement next week in anticipation of better pricing. Volatility is expected to remain high with various market drivers developing this week.
Crude
- Protests broke out over the weekend in China due to the ongoing covid-zero protocols.
- Russia is drafting a presidential decree that will prohibit Russian companies and any traders buying Russian crude from selling it to anyone participating in the price cap.
- EU diplomats suspended price cap talks on Friday and will resume discussion today.
- The Biden administration granted Chevron a license to resume oil production in Venezuela after US sanctions halted all drilling three years ago.
- Oil analyst Jose Chalhoub said Chevron might only add 20-30,000 bpd of oil into the world market in the next six months due to the labor and costs of a restart.
- According to its OPEC delegate, Iraq plans to increase oil export capacity next year to 1-1.5 million bpd by 2025.
- BP is restarting its Rotterdam refinery following ongoing labor strikes.
- Prompt WTI is trading at its lowest level since December 2021.
- Baker Hughes reported US oil rigs rose by 4 to 627 last week.
- As of 8:48 am CST: Brent crude oil down $2.33 to $81.30, US dollar index down $0.176 to 105.783 while the nearby e-mini S&P 500 futures contract is down 21.25 to 4011.00.
Diesel
- The Nymex heating oil crack fell to its lowest level since September 30th.
- Diesel inventories are 14 million barrels below its 5-year average.
- Kuwait Petroleum exported its first shipment of aviation jet fuel from its new Al-Zour refinery.
Gasoline
- Gasoline inventories are 11 million barrels below its 5-year average.
- US gasoline demand fell 415,000 bpd in the week ending Nov. 18.
Propane
- Conway is trading at .8275 while Belvieu is trading at .8150.
- Conway is trading at 44% of crude.
- The US is exporting 61% of production as of 11/18/22.
- The EIA reported propane inventories rose 1.2 million barrels in the week ending 11/18.
Natural Gas
- Total US gas demand fell to 100.2 Bcf/d.
- Total US dry production up to 98.6 Bcf/d.
- Overnight weather runs removed 13 HDDs through the two-week forecast.
- Baker Hughes reported US gas rigs fell by 2 to 155 last week.
Continuous WTI: Nearby crude traded below its lower Bollinger band this morning and is also nearing oversold values according to the 14-day RSI value near 30.
