Outlook: Energies are mixed to start the week with crude and gasoline trading higher while diesel lags behind near even. Crude is attempting to find stability after bouncing off support last week. The US has announced its first purchase to refill the SPR which will be in February. With the US a vocal buyer around $70, the market can expect to find continued support in the vicinity for any downside moves. China will continue to provide volatility as the transition away from their covid restrictions while dealing with case spikes through their busy holiday travel season. Expect trade to thin as the week progresses into the holiday weekend.
Crude
- The US Energy Department said on Friday it will begin buying back oil for the SPR and will buy up to 3 million barrels for delivery in February.
- Saudi Arabia’s exports rose in October to 7.773 mbpd and the highest level in 30 months according to data from JODI.
- China is expecting three waves of covid this winter as they transition away from their Covid-Zero policy.
- Russia said today it is still considering a response to the current oil price cap.
- Citigroup revised its 2023 WTI forecast lower to $75, citing weak demand and ample global supply.
- Global crude in floating storage fell by 27% last week, reaching its lowest level since April 2020.
- The net spec and fund long position have declined to its lowest level since September 2016.
- Bakers Hughes reported oil rigs fell by 5 to 620 last week.
- Last trade day for Jan WTI is tomorrow.
- As of 8:26 am CST: Brent crude oil up $1.40 to $80.44, US dollar index down $0.114 to 104.587 while the nearby e-mini S&P 500 futures contract is down 0.25 to 3878.00.
Diesel
- Last week’s COT report showed managed money traders net sold 6,637 contracts and are now net long 14,069 contracts.
- High refinery utilization will battle cold weather this week and any disruption could provide support to products.
Gasoline
- China’s November gasoline exports were up 84% compared to year-ago levels.
- Last week’s COT report showed managed money traders reduced their net long position by 5,160 contracts to a net long 47,452.
Propane
- Conway is trading at .7200 while Belvieu is trading at .6925.
- Conway is trading at 40% of crude.
- The US is exporting 58% of production as of 12/9/22.
Natural Gas
- Total US gas demand rose to 124.7 Bcf/d.
- Total US dry production fell to 97.2 Bcf/d.
- Overnight weather runs removed 17 HDDs through the two-week forecast.
- Baker Hughes reported gas rigs rose by 1 to 154 last week.
Continuous Daily WTI: January WTI is set to expire tomorrow and trades at an 18-cent discount to the February contract today. The overall trend for crude since June has been lower, while the nearby contracts are attempting to stabilize near $75.
