Outlook: Energies are mixed to start the morning with crude and diesel working lower while gasoline works higher. The market is working with a lot of uncertainty surrounding the sanctions imposed on Russia this week and the real impact on supply. Until we see the data, speculation appears to lean on Russian flows being maintained. Macro pressure remains in the market with recent reports suggesting an expanding economy despite the ongoing interest rate hikes. The Fed is scheduled to meet next week to announce the next round of increases. Reuters is estimating another draw in crude and builds in both products for last week. The API will report their inventory survey this afternoon to give us further insight on what we might see tomorrow morning when data is confirmed by the EIA.
- China is set to further reduce covid restrictions as early as Wednesday, according to Reuters.
- Rystad Energy says that the threat of losing insurance will limit Russia’s access to the tanker market and could reduce crude exports by 500,000 from February levels.
- Oil tankers halting Kazakh crude are prevented from leaving the Black Sea following Turkey’s move to insist on proof that they’re properly insured.
- Chevron is scheduled to cease operational control of the Petropiar upgrader at Jose Petrochemical Complex this week. Chevron has roughly 200,000 bpd of production capacity in Venezuela per Bloomberg.
- The Biden Administration is expected to meet with oil and gas executives concerning the US’ abilities to support Ukrainian energy infrastructure.
- Markets are finding macro pressure with economic reports reflecting a strong economy which could incentivize the Fed to take a more hawkish stance on interest rate hikes.
- US ISM Services PMI was reported yesterday at 56.5 vs 53.1 est.
- Reuters estimates crude inventories fell by 3.8 million barrels last week.
- The API will report its inventory survey at 3:30 CT.
- The EIA will release its short-term energy outlook at 11:00 CT.
- As of 8:16 am CST: Brent crude oil down $1.60 to $81.08, US dollar index down $0.149 to 105.140 while the nearby e-mini S&P 500 futures contract is up 1.25 to 4005.00.
- Reuters estimates distillate stocks rose by 2.1 million barrels last week.
- The prompt diesel spread traded down to 2 cents today and its lowest level since August.
- Reuters estimates gasoline inventories rose by 2.9 million barrels last week.
- US gasoline shipments from Europe rose to 245,000 bpd last week, up from 116,000 bpd the week prior according to Bloomberg data.
- Conway is trading at .7225 while Belvieu is trading at .7025.
- Conway is trading at 39% of crude.
- The US is exporting 62% of production as of 11/25/22.
- Total US gas demand fell to 111.8 Bcf/d.
- Total US dry production rose to 97.8 Bcf/d.
- Overnight weather runs removed 14 HDDs through the two-week forecast.
- Negotiations regarding a price cap for TTF are ongoing with EU energy ministers.
WTI Curve: WTI’s forward curve continues to slip further into contango, where nearby contracts trade at a discount to deferred contracts. When supply becomes less scarce, deferred contracts develop a premium due to storage fees applied to protect against volatility. US inventories have started to draw again with SPR releases slowing which may slow or halt WTI’s move deeper into contango. Chart sourced from Bloomberg.