Outlook: Energies are looking to rebound this morning with ULSD and NG leading the complex. Both diesel and natural gas are finding support from colder weather revisions and the anticipation for increased heating demand. Expectations for record fuel exports out of China in December and the elevated refinery rates in the US will act to dampen upside moves for products. Nearby crude has rejected $70 support over the last few sessions backed by the US looking to refill the SPR at or near these levels. The market trend may be controlled by the macros this week with inflation data due out tomorrow and the Fed meeting the following day.
Crude
- A Beijing government official said fever clinic visits rose to 22,000 per day, up 16 times over the previous week.
- Canada’s TC Energy said it had not yet determined the cause of the pipeline leak and has no timeline for when the pipeline will resume operation.
- According to Bloomberg, almost 90% of Russian seaborne crude flows are heading to Asia as of last week.
- Libyan oil production has increased to 1.2 million bpd. Their oil minister stated they hope to be back to 1.6 million bpd within two or three years.
- Baker Hughes reported oil rigs fell by 2 to 625 last week.
- The Fed will announce the next round of interest rate hikes on Wednesday. Trade is expecting an increase of 50 bps.
- US November CPI will be announced tomorrow morning at 7:30 CT. Trade expects inflation to fall to 7.3%.
- As of 9:08 am CST: Brent crude oil up $1.41 to $77.51, US dollar index up $0.048 to 104.858 while the nearby e-mini S&P 500 futures contract is up 12.25 to 3948.00.
Diesel
- Last week’s COT report showed ULSD managed money traders are net long 20,706 contracts after net selling 10,717 contracts.
- Diesel may find additional strength this week with winter storms and cold weather working through the US.
Gasoline
- The Keystone pipeline disruption has cut off direct flows to two US refineries.
- China’s fuel exports are expected to hit record levels in December.
- Last week’s COT showed RBOB managed money traders are net long 52,612 contracts after net selling 4,531 contracts.
Propane
- Conway is trading at .7000 while Belvieu is trading at .6775.
- Conway is trading at 41% of crude.
- The US is exporting 60% of production as of 12/2/22.
Natural Gas
- Total US gas demand rose to 114.5 Bcf/d.
- Total US dry production fell to 97.4 Bcf/d.
- Overnight weather runs added 24 HDDs through the two-week forecast.
- Baker Hughes reported natural gas rigs fell by 2 last week to 153.
Continuous NG: Natural gas has gapped higher this morning near its 200-day moving average near $7. A warm start to the heating season is quickly being erased with a significant increase in HDDs over the last several sessions. The latest HDD forecast for December is 852 or 90% of a 30-year historical.
