Outlook: The energy market is seeing weakness again today with a plethora of bearish signals this week. Both WTI and ULSD saw key reversals in their daily contracts yesterday, which can indicate a reversal of the previous upward trend. Headlines have also leaned bearish as demand concerns in China grow with covid elevated covid cases. Saudi Arabia is expected to lower their light crude prices to Asia to their lowest level in 15 months which can be an indicator that demand is faltering. While economic data out of China has shown signs of shrinking, many other economies are expected to see the same result with interest rates tightening to tame inflation. The FOMC minutes will be released today at 1:00 CT which could give further insight into the Fed's strategy moving forward. The Fed previously increased interest rates by 50 bps in December after four consecutive increases of 75 bps. Fundamental data is delayed by a day due to the holiday which leaves us with the API survey this afternoon and EIA report tomorrow morning.
Crude
- Reuters estimates OPEC’s December crude production rose by 120,000 bpd.
- Saudi Arabia cut their light crude prices to Asia to a 15-month low.
- Bloomberg tanker tracking data suggests Iraq exports increased by 2% to 3.63 mbpd in December.
- About 40% of Texas's 5.9 mbpd of crude processing capacity was halted at the peak of the winter storm in December, according to Energy Aspects.
- The EU is considering travel restrictions for travelers coming out of China.
- WTI saw a key reversal lower yesterday in its continuous/February daily contract yesterday.
- The US SPR fell by 2.7 million barrels last week to 372.4 million barrels.
- Reuters estimates crude inventories rose by 2.2 million barrels last week.
- The API will report their inventory survey at 3:30 CT.
- As of 8.23 am CST: Brent crude oil down $2.13 to $79.97, US dollar index down $0.483 to 104.035 while the nearby e-mini S&P 500 futures contract is up 16.25 to 3862.00.
Diesel
- Reuters estimates diesel inventories fell by 1.8 million barrels last week.
- February daily diesel saw a key reversal lower yesterday.
- Lyondell Basell Industries is reporting a fire at its 263,776 bpd Houston refinery.
Gasoline
- Reuters estimates gasoline inventories fell by 1.5 million barrels last week.
- February daily RBOB failed to break through its 200-day moving average yesterday at $2.51 and has sold off over 20 cents following the rest of the complex.
Propane
- Conway is trading at .7850 while Belvieu is trading at .7825.
- Conway is trading at 43% of crude.
- The US is exporting 52% of production as of 12/23/22.
Natural Gas
- Total US gas demand fell to 100.0 Bcf/d.
- Total US dry production rose to 95.7 Bcf/d.
- Overnight weather runs removed 7 HDDs through the two-week forecast.
February Daily Diesel: The February daily diesel chart saw a key reversal yesterday with a higher high than the prior day and a lower low and lower close than the prior day’s low. The contract will look to hold below nearby support at $3 today to continue the slide lower.
