Outlook: Energies are working marginally higher to end the week after the sharp selloff to start the year sparked purchasing. Yesterday’s EIA report revealed the effect of the winter storm last week. A sharp decline in refinery utilization counteracted significant demand loss and ultimately ended in a stalemate from a price-driving perspective. Macroeconomic concerns will likely carry heavy weight this year however a larger-than-expected non-farm payroll report is largely being shrugged off today. Energies have managed to disconnect from outside markets this week however this may be a short-lived trend. Look for additional demand data out of China next week and US inflation data to help establish market direction in the near term.
Crude
- China is purchasing crude from Russia that would typically be shipped to Europe, with a report of 5 million barrels purchased from the Black Sea.
- China expects travel during the Lunar New Year between Jan 21-27 to nearly double year-ago levels. Authorities estimate 2.1 billion passenger trips vs 1.05 billion last year.
- US nonfarm payrolls was reported at 223k vs 200k est.
- US refinery utilization fell by 12.4% last week due to the winter storm.
- Crude production increased by 100,000 bpd to 12.1 mbpd.
- The US SPR fell by 2.7 million barrels last week to 372.4 million barrels.
- The EIA reported crude inventories rose by 1.7 million barrels last week.
- Baker Hughes will report its rig count at 12:00 CT.
- As of 8.48 am CST: Brent crude oil up $1.18 to $79.87, US dollar index up $0.108 to 105.150 while the nearby e-mini S&P 500 futures contract is up 5.25 to 3834.00.
Diesel
- The EIA reported distillate inventories fell by 1.4 million barrels last week.
- Diesel demand fell by 27.9% last week.
- The Colonial pipeline expects line 3 to resume flows by midday on January 7th.
Gasoline
- The EIA reported gasoline inventories fell by 346,000 barrels last week.
- Gasoline demand fell by 19.4% last week.
Propane
- Conway is trading at .7400 while Belvieu is trading at .7375.
- Conway is trading at 42% of crude.
- The US is exporting 74% of production as of 12/30/22.
- The EIA reported propane inventories fell by 3.7 million barrels last week.
- Weather has hurt domestic propane demand however elevated exports have limited downside pressure.
Natural Gas
- Total US gas demand rose to 110.2 Bcf/d.
- Total US dry production fell to 96.0 Bcf/d.
- Overnight weather runs removed 16.5 HDDs through the two-week forecast.
- The EIA reported a natural gas withdrawal of 221 Bcf.
- Rapidan Energy Group said that Freeport LNG will likely be shut down for several more months.
Daily WTI: After hitting its upper Bollinger band, nearby crude sold off 9% through two sessions. Despite the sharp move lower, the market did not tip oversold from a Bollinger or 14-day RSI value. Crude may find nearby resistance at the middle Bollinger band at $76.
