Outlook: Crude and products are trading higher for a fourth consecutive day today. February crude traded to a high of $79.90 so far this morning and is up over 10% over the last two weeks. Independent research firms are estimating that China’s covid cases and deaths are much higher than internal official data suggests. With China being the largest crude importer in the world, any threat to demand can provide increased volatility to the market. Just a few weeks following oil-targeted sanctions against Russia, data is beginning to show the effect on oil flows. Russian oil exports through the Baltic are expected to decline by 20% in December. Expect trade to thin ahead of the holiday weekend, which could create exaggerated price swings if a new market driver develops.
Crude
- Airfinity Ltd estimates China could be experiencing 1 million covid cases and 5,000 virus deaths every day. Case counts could rise to 3.7 million in January according to the firm.
- WHO’s Mike Ryan says that China is likely behind the curve in monitoring their active covid cases which discredited their official figures.
- Libya plans to export 32.03 million barrels of crude in December, an 8.3% increase from November, according to Bloomberg.
- Russian oil exports through the Baltic Sea are expected to decline 20% in December according to Reuters calculations.
- US net imports fell by 1.1 million barrels last week, partially driven by the disruption to the Keystone pipeline.
- The EIA reported a larger-than-expected draw in crude stocks of 5.9 million barrels for last week.
- As of 8:20 am CST: Brent crude oil up $0.80 to $83.00, US dollar index up $0.072 to 104.234 while the nearby e-mini S&P 500 futures contract is down 33.25 to 3872.00.
Diesel
- The EIA reported a 241,000 barrel draw in diesel stocks last week.
- US diesel demand rose 6.6% last week to 4.0 million bpd.
Gasoline
- The EIA reported a 2.5 million barrel build in gasoline stocks last week.
- Gasoline demand rose 5.6% last week to 8.7 million bpd.
Propane
- Conway is trading at .7100 while Belvieu is trading at .6800.
- Conway is trading at 38% of crude.
- The US is exporting 57% of production as of 12/9/22.
- The EIA reported a 2.9 million barrel draw in propane stocks last week.
Natural Gas
- Total US gas demand fell to 131.5 Bcf/d.
- Total US dry production fell to 96.9 Bcf/d.
- Overnight weather runs were unchanged through the two-week forecast.
- The EIA is expected to report a 94 Bcf withdrawal today.
- The 5-year average withdrawal is 124 Bcf.
Continuous Daily WTI: WTI has traded near $80 this morning as the upward momentum continues. Expectations for declining exports out of Russia and rising covid cases in China are providing support to crude this week.
