Outlook: Energies are continuing their weekly climb with crude up over two dollars on the day. Markets are finding support from a change in the narrative out of China and a weaker US dollar. China speaking to a new phase of covid measures brings less demand risk than their current covid-zero policy. The US dollar is pushing to three-month lows following Fed Chair Jerome Powell’s dovish comments yesterday. Domestic demand loss will still be closely monitored as a recessionary signal moving forward as both gas and diesel demand declined last week. The market is still waiting for a finalized price cap figure from the EU, however, it's being reported the group has narrowed to around $60.
Crude
- China’s top official in charge of managing covid said the country’s efforts to combat the virus are entering a new phase with the virus variant weakening and more Chinese getting vaccinated.
- The cities of Guangzhou and Chongqing eased covid restrictions yesterday.
- The EU is narrowing in on a price cap of around $60, which is lower than the $65-$70 proposed by the G7.
- Bloomberg data suggests Russia’s crude production rose to an eight-month high in November, producing 10.9 million bpd.
- Chair Jerome Powell signaled the Fed will slow the pace of interest rate hikes next month.
- Eurozone manufacturing PMI was reported at 47.1 vs 47.3 est.
- The US dollar index fell to a three-month low on Thursday.
- Refinery operating rates rose to 95.2% which is over 6% higher than the 5-year average.
- Net oil imports fell by 1.4 million barrels last week.
- The EIA reported a 12.6-million-barrel draw for crude stocks last week.
- As of 8:22 am CST: Brent crude oil up $1.89 to $88.86, US dollar index down $0.962 to 104.988 while the nearby e-mini S&P 500 futures contract is up 15.25 to 4097.00.
Diesel
- The EIA reported a 3.5-million-barrel build in diesel stocks last week.
- US diesel demand fell by 4.9% last week to 3.6 million bpd.
- The EPA will ask companies to blend 20.82 billion gallons of renewable fuel into their diesel and gasoline next year in the proposal is finalized.
Gasoline
- The EIA reported a 2.7-million-barrel build in gasoline stocks last week.
- Gasoline demand remained near unchanged falling just 0.1% at 8.3 million bpd.
Propane
- Conway is trading at .7925 while Belvieu is trading at .7825.
- Conway is trading at 41% of crude.
- The US is exporting 62% of production as of 11/25/22.
- The EIA reported a 1.6-million-barrel build in propane stocks last week.
- Midwest inventories rose by 729,000 barrels last week.
Natural Gas
- Total US gas demand rose to 115.3 Bcf/d.
- Total US dry production rose to 97.9 Bcf/d.
- Overnight weather runs removed 5 HDDs through the two-week forecast.
- The EIA is expected to report a 93 Bcf draw in today’s report.
- The 5-year average draw is 34 Bcf.
Midwest Propane Stocks: Midwest propane stocks have pushed to a five-year seasonal high following the unexpected build reported yesterday. Total US stocks sit at 90.6 million barrels and are at their third highest seasonally in nine years. Conway remains cheap relative to crude currently valued at 41%.
