Outlook: The energies complex is looking to rebound this morning after WTI hit 2022 lows yesterday. With the selloff this week, crude and products all tipped oversold on various metrics which could be spurring some buying activity. Additional support is being found from a disruption on the Keystone pipeline in Nebraska and reports that Iraq’s November oil production fell by 221,000 bpd. There are a lot of unknown variables with the sanctions enforced against Russia this week and how that will affect their production and exports. If early data begins to show the sanctions are causing Russia to throttle back, there could be a lot of upside risk in the market. Conversely, if the US economy continues to show signs of steady or rising inflation, aggressive rate hikes could increase recessionary fears.
- Canada’s TC Energy shut its 622,000 bpd Keystone pipeline following an oil release into a creek near Steele City, Nebraska.
- Iraq produced 4.43 million bpd of crude in November, down 221,000 bpd from October, to remain in compliance with OPEC+ cuts.
- 20 oil tankers in Russia’s Black Sea ports remain idle due to Turkish enforcement to provide proof of insurance per Reuters.
- US refinery utilization rose for the sixth consecutive week to 95.5%.
- US crude production rose by 100,000 bpd to 12.2 million bpd.
- The US SPR fell by 2.1 million barrels last week.
- The EIA reported a 5.1 million barrel build in crude stocks last week.
- As of 8:45 am CST: Brent crude oil up $0.84 to $78.01, US dollar index down $0.040 to 105.060 while the nearby e-mini S&P 500 futures contract is up 7.25 to 3944.00.
- The EIA reported a 6.1 million barrel build in diesel stocks last week.
- Diesel stocks sit 10 million barrels below the 5-year average.
- The four-week seasonal average for diesel demand fell to its lowest level since 2015.
- The prompt diesel contract’s 14-day relative strength index is at 27, which indicates the market is still oversold today.
- The EIA reported a 5.3 million barrel build in gasoline stocks last week.
- Gasoline stocks sit 6 million barrels below the 5-year average.
- Gasoline demand rose marginally by 0.3% but remains below 5-year averages despite falling pump prices.
- Conway is trading at .6950 while Belvieu is trading at .6775.
- Conway is trading at 40% of crude.
- The US is exporting 60% of production as of 12/2/22.
- The EIA reported a 955,000 barrel draw in propane stocks last week.
- Midwest inventories rose by 100,000 barrels.
- Total US gas demand fell to 106.6 Bcf/d.
- Total US dry production fell to 97.2 Bcf/d.
- Overnight weather runs added 9 HDDs through the two-week forecast.
- The EIA is expected to report a 26 Bcf withdrawal today.
Continuous ULSD: Despite the move higher today, nearby diesel holds an RSI value that would indicate the market is oversold. Demand headwinds will look to suppress upside moves along with any indications of more aggressive interest rate hikes.