Outlook: Energies are mixed to start the day with crude edging higher while products move lower. China continues to unwind some of its covid restrictions at a pace faster than expected. They will now allow infected people with mild symptoms to quarantine at home and will no longer test people traveling domestically. Their economy is showing signs of resilience to this recent covid wave with oil imports at a yearly high in November and copper imports at all-time highs. The market is still showing concern regarding a recession next year with major banks reiterating their warnings. November CPI will be reported next Tuesday followed by the Fed’s rate decision on Wednesday. The EIA will report inventories this morning with the trade looking for a significant draw in crude and builds in both gasoline and diesel.
Crude
- China’s oil imports rose to their highest level this year according to Bloomberg.
- China’s copper purchases hit a record level last month defying signs of an economic slow down according to Bloomberg.
- China’s President Xi is expected to meet with Saudi Crown Prince bin Salman today to discuss energy and infrastructure deals per Bloomberg.
- The EIA forecasts US oil production to reach a record high of 12.34 million bpd next year.
- The EIA lowered their 2023 oil demand forecast from 100.98 million bpd to 100.88 million bpd.
- Reuters estimates crude inventories fell by 3.8 million barrels last week.
- An industry group survey yesterday showed crude stocks fell by 6.4 million barrels last week.
- The US SPR fell by 2.1 million barrels last week.
- The EIA will release its inventory report at 9:30 CT.
- As of 8:28 am CST: Brent crude oil up $0.08 to $79.43, US dollar index down $0.550 to 105.028 while the nearby e-mini S&P 500 futures contract is down 11.25 to 3934.00.
Diesel
- Reuters estimates distillate stocks rose by 2.1 million barrels last week.
- An industry group survey yesterday showed diesel stocks rose by 3.55 million barrels last week.
Gasoline
- Reuters estimates gasoline inventories rose by 2.9 million barrels last week.
- An industry group survey yesterday showed gasoline stocks rose by 5.9 million barrels last week.
Propane
- Conway is trading at .7150 while Belvieu is trading at .6875.
- Conway is trading at 40% of crude.
- The US is exporting 62% of production as of 11/25/22.
- OPIS estimates propane inventories rose by 776,000 barrels last week.
Natural Gas
- Total US gas demand fell to 108.2 Bcf/d.
- Total US dry production rose to 97.7 Bcf/d.
- Overnight weather runs added 11 HDDs through the two-week forecast.
- The EIA raised their natural gas production for 2023 by 1% to 100.4 Bcf/d
Chinese Imports: China imports 11.42 million bpd in November, up 12% from October. Chinese demand is expected to fall in December; however, this marked their highest import level since January.
