Outlook: Energies are moving higher to start the day but in an unconvincing fashion given the significant selloff this week. January WTI has traded in a $10 range this week and looks to post a weekly loss near 10%. Products have also tumbled with January diesel breaking $3.00 while January gasoline flirts with breaking through $2.00. Headlines this week came across as relatively mixed however, the bears overpowered the market. Recessionary fears and fund liquidation may have been the drivers this week that overshadowed a domestic oil spill and easing covid restrictions in China. The market may turn to macroeconomics next week when we see November CPI on Tuesday and the Fed’s rate decision on Wednesday.
- Russia’s President Putin said this morning that a decree responding to oil price caps will be announced in the coming days.
- President Putin reiterated they will not sell oil to those who proposed the caps.
- Canada’s TC Energy shut its 622,000 bpd Keystone pipeline following an oil release into a creek near Steele City, Kansas.
- The pipeline spill is estimated at 14 kbpd and is the largest onshore spill since 2013 according to PHMSA.
- China celebrates its Lunar New Year in January and is a popular travel time. Covid outbreaks could hinder the easing of restrictions.
- The Fed will announce its next rate hike on Wednesday.
- US PPI for Food and Energy was reported at 6.2% vs 6% est and 6.7% in Oct.
- Michigan Consumer Sentiment Index will report at 9:00 CT.
- Baker Hughes will report its rig count at 12:00 CT.
- As of 8:00 am CST: Brent crude oil up $0.91 to $77.06, US dollar index down $0.020 to 104.754 while the nearby e-mini S&P 500 futures contract is down 8.25 to 3957.00.
- AAA reports the national average diesel price at $4.981.
- The threat of a global diesel shortage has been heavily diminished over the last several weeks with the US and China ramping up refinery rates.
- AAA reports the national average gas price at $3.315.
- Nearby RBOB may test psychological support at $2.00 ahead of the Holidays when travel picks up.
- Conway is trading at .6950 while Belvieu is trading at .6625.
- Conway is trading at 41% of crude.
- The US is exporting 60% of production as of 12/2/22.
- Total US gas demand rose to 110.6 Bcf/d.
- Total US dry production rose to 97.7 Bcf/d.
- Overnight weather runs added 7 HDDs through the two-week forecast.
- The EIA reported a 21 Bcf withdrawal from storage last week.
- Natural gas inventories are 51 Bcf (1.6%) below the 5-year average.
Continuous RBOB: Prompt RBOB is close to testing the psychological support of $2.00 following the steep selloff this week. Despite falling pump prices, demand has remained steady below year-ago and 5-year average levels. Prompt RBOB has not traded below $2.00 since December 2021.