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Outlook: Crude and products are tracking higher again today as the slow rally continues. There has been a lack of significant new market drivers this week which has dampened volatility. Chinese demand continues to grab the spotlight as covid cases climb against the unwinding of restrictions. Only 5 covid-related deaths were reported yesterday which suggests the mortality of the spike is not significant. Natural gas prices have fallen over 70 cents this week on warmer weather revisions on the backend of the forecast. Cold weather and winter storms could increase heating demand across the country while threatening holiday travel in some portions. Fundamental data will begin reporting today with the API this afternoon. Reuters is calling for a draw in crude and a build in products, and the EIA will confirm data tomorrow morning.
Crude
- A Barclays analyst said Russian oil output could fall by 1 mbpd by the end of March after the full implementation of EU sanctions.
- China reported 2,722 new covid cases yesterday, compared to 1,995 the day prior.
- Official covid case figures in China are becoming less reliable due to the decrease in testing. Demand and mobility data will likely gather more attention.
- US net crude imports fell to 1.1 mbpd in November, the lowest level since record-keeping data began in 2001.
- Reuters estimates crude inventories fell by 200,000 barrels last week.
- The API will report their inventory survey this afternoon at 3:30 CT.
- Today is the last trade day for January WTI.
- As of 7:55 am CST: Brent crude oil up $0.58 to $80.38, US dollar index down $0.527 to 104.192 while the nearby e-mini S&P 500 futures contract is down 6.25 to 3839.00.
Diesel
- Reuters estimates diesel stocks rose by 700,000 gallons last week.
- Indian product consumption hit an eight-month high according to Bloomberg data.
Gasoline
- Reuters estimates gasoline inventories rose by 1.9 million barrels last week.
- Bloomberg data suggest that Chinese traffic congestion has moderated.
Propane
- Conway is trading at .7000 while Belvieu is trading at .6725.
- Conway is trading at 38% of crude.
- The US is exporting 58% of production as of 12/9/22.
Natural Gas
- Total US gas demand fell to 132.1 Bcf/d.
- Total US dry production fell to 96.8 Bcf/d.
- Overnight weather runs removed 10 HDDs through the two-week forecast.
- Freeport LNG was on track to receive natural gas today which could signal a return to service by year-end.
Continuous Daily ULSD: Diesel has seen high volatility over the last several sessions, trading against crude at times. Warm weather revisions on the back end of the forecast and winter storms pose a threat to demand this week. ULSD will look to hold above its 9-day moving average in orange to maintain momentum higher this week.
