Outlook: Crude and products are trading higher today while natural gas gaps lower. Over the weekend, OPEC+ decided to leave their current production cut of 2 million bpd unchanged. This decision was relatively in-line with market expectations despite earlier rumors of an additional cut. China is drawing most of the market attention today as they move to ease covid curbs. The publicity of full maskless crowds at the world cup has fueled protests over the last week against China’s strict covid policies. Additional support may be coming from the EU and G7s sanctions enforced against Russian oil today. There remains doubt regarding the effectiveness of the price caps established at $60 but a strong Russian response in retaliation could have a significant impact on the market.
Crude
- OPEC+ left production unchanged for January following their meeting on Sunday.
- Chinese authorities eased covid testing requirements across major cities over the weekend.
- The EU’s price cap and embargo on Russian seaborne exports go into effect today.
- The G7 lowered their proposed price cap to match the EU’s at $60 per barrel.
- Russia is working on a response to the sanctions being imposed according to Kremlin spokesmen.
- Russian ESPO oil blend is selling for $79 per barrel in Asia today.
- Asian refiners have the opportunity to buy Russian crude under $60 due to the G7s price cap implementation according to Taiwan’s Formosa Petrochemical spokesman.
- Baker Hughes reported US oil rigs remained flat last week.
- Last week’s COT report showed managed money traders decreased net length by 45,000 lots through last Tuesday.
- As of 8:53 am CST: Brent crude oil up $2.20 to $87.77, US dollar index down $0.018 to 104.527 while the nearby e-mini S&P 500 futures contract is down 30.25 to 4044.00.
Diesel
- Last week’s COT shows HO Managed Money traders were net long 31,423 contracts after increasing by 1,209 contracts.
- Warmer weather forecasts over the weekend may keep a lid on any significant upside moves in diesel today.
Gasoline
- Last week’s COT show RBOB Managed Money traders were net long 58,742 contracts after falling 877 contracts.
- Nearby RBOB may find resistance at its 9-day moving average today around $2.3750.
Propane
- Conway is trading at .7500 while Belvieu is trading at .7450.
- Conway is trading at 41% of crude.
- The US is exporting 62% of production as of 11/25/22.
Natural Gas
- Total US gas demand fell to 109.9 Bcf/d.
- Total US dry production fell to 97.3 Bcf/d.
- Overnight weather runs removed 41 HDDs through the two-week forecast.
- Freeport LNG has delayed a partial restart from the middle of December to the end of the year.
- Baker Hughes reported natural gas rigs were unchanged last week.
Continuous Daily NG: Nearby natural gas gapped lower today trading nearly 7% lower. Bearish weather runs over the weekend along with a delayed restart at the Freeport LNG facility are providing pressure this morning.
